There's a lot of work that goes into planning for retirement, and there are loads of factors to consider. At what age do you want to retire? How much should you save? How much will you be spending each year?
One other crucial factor to think about is the age you want to begin claiming Social Security benefits. The age you file for benefits will determine how much you receive every month for the rest of your life, so it's important to take this decision seriously. This one retirement chart can help you decide when to claim Social Security benefits, which can influence the rest of your retirement.
How the age you claim affects your benefits
One of the most important factors to understand when it comes to claiming Social Security benefits is your full retirement age (FRA). By claiming at your FRA, you'll receive the full benefit amount you're entitled to. Claim before or after that age, though, and you'll receive smaller or larger checks each month.
If you were born in 1960 or later, your FRA is 67 years old. Those born before 1960 will have an FRA of either 66 or 66 and a certain number of months, depending on the exact year you were born. You can begin claiming benefits as early as age 62, but by doing so, you'll only receive a fraction of the full benefit amount you're entitled to collect. For example, if you have a FRA of 67 and you claim at age 62, you'll only receive 70% of your full benefit amount. But if you were to wait until age 70 to claim, you'd receive your full benefit amount plus an extra 24% each month.
The average Social Security recipient receives approximately $1,500 per month in benefits, according to the Social Security Administration. If you have an FRA of 67 years old and would be collecting $1,500 per month by claiming at that age, here's how much you would collect in benefits depending on the age you began claiming:
|Age You Began Claiming Benefits||% of Full Benefit Amount Collected||Monthly Benefit Amount|
In this case, waiting until age 70 to file for benefits could earn you around $800 more per month than if you'd claimed at age 62. If your savings aren't as strong as you'd hoped they would be, this extra cash can go a long way in retirement.
How the age you claim benefits affects the rest of your retirement
Choosing the right age to begin claiming benefits not only affects your monthly Social Security checks, it can also affect your entire retirement.
For one, the amount you're receiving in Social Security benefits will affect how much you'll need to save on your own. If you plan to delay claiming benefits to earn those bigger checks, you may not need to save quite so much in your retirement account. But if you want to claim early, you could need to supercharge your savings to make up for the smaller checks.
The age at which you begin claiming benefits can also affect what age you choose to retire. You don't have to retire when you begin claiming benefits, but many retirees choose to do so simply because it's easier. If you want to delay benefits, for example, it could be tough to retire in your early 60s and then survive on your savings alone for several years until you're ready to claim. For that reason, some people may choose to continue working longer in order to delay benefits and maximize their monthly checks.
Social Security benefits are an integral part of most people's retirement plans, so it's important to ensure you know how the age at which you begin claiming will affect your benefit amount. By considering all of your options and choosing to claim at the best age for your situation, you'll set yourself up for a more enjoyable retirement.