If you're going through life assuming that you'll start collecting your Social Security benefits at 65, or at some point once you're eligible, you may be in for some surprises. For one thing, the only people whose "full retirement age" (the time at which they can collect their full benefits) is 65 are currently 77 or older. Those aged 60 to 76 this year have a full retirement age between 66 and 67, and the many millions of us younger than that are looking at a full retirement age of 67.
You can start collecting your benefits as early as age 62, though your benefit checks will be smaller if you claim this early. And delaying -- up to age 70 -- can make your checks bigger. Thus, when you start collecting your benefits is an important matter. Below, you'll find the most important Social Security chart that reflects how benefits change depending on when you start collecting them.
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The Most Important Social Security Chart
Without further ado, the critical chart is below. It addresses those born in 1960 or earlier who have a full retirement age of 67:
|
If You Start Collecting Social Security at: |
Your Benefits Will Be: |
|---|---|
|
Age 62 |
Reduced by about 30% |
|
Age 63 |
Reduced by about 25% |
|
Age 64 |
Reduced by about 20% |
|
Age 65 |
Reduced by about 13.3% |
|
Age 66 |
Reduced by about 6.7% |
|
Age 67 |
Unchanged |
|
Age 68 |
Increased by about 8% |
|
Age 69 |
Increased by about 16% |
|
Age 70 |
Increased by about 24% |
Source: SSA.gov.
When should you start collecting Social Security?
You might think, looking at the chart above, that waiting until age 70 is the best move. It can be the best move for many people, but not for everyone. The most common age at which people start collecting their benefits is 62. Many people start early because they have to due to an unexpected job loss, health setback, or needing to care for a parent. Many others simply need that income as soon as possible.
Starting early is also what you might do if people in your family don't tend to live long lives or if you plan to retire early. You might also start early because doing so doesn't make a huge difference if you live an average-length life. The system is designed so that total income from Social Security will be roughly the same no matter when you start collecting -- if you live an average-length life.
Consider waiting
If you can hang on until age 70 -- or at least as long as possible -- it can serve you well. Here are the advantages of delaying until then:
- You'll get bigger checks -- and potentially much bigger ones. (Note, though, that by delaying, you'll end up receiving fewer checks.)
- If you live an extra-long life (and many of us may), you'll come out ahead, with greater overall income from Social Security.
- If you keep working until 70 or into your late 60s, you can save and invest money for retirement for more years, amassing a bigger nest egg.
- That nest egg will also have to support you for fewer years.
- By staying at your job longer, you may be able to remain on your employer's health insurance plan longer, which could help you save money.
Waiting as long as possible to start collecting is also smart strategically if you're married and are the one with the higher earnings history. That means your checks will be bigger than your spouse's, and you can maximize them by delaying. Such a move can help your spouse should you die first because a surviving spouse can collect either their own benefits or their late partner's benefits -- whichever are greater.
There are other ways to increase your Social Security benefits beyond just delaying collecting them. The more you know about Social Security, the more money you may be able to get out of it.
