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Claiming Social Security at 65? You May Need to Rethink That

By Christy Bieber - May 6, 2021 at 5:37AM

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You're in for a benefits cut if you claim Social Security at 65.

Claiming Social Security at 65 may sound like a good plan.

After all, when Franklin D. Roosevelt created the benefits program in 1935, 65 was set as the "standard" retirement age. Any retiree who chose it would get their full Social Security benefit. 

But it's not 1935 any more. And today, starting your checks at 65 may actually not be the best choice. There are a few reasons you could end up rethinking the decision to start your benefits then and instead claiming them later (or earlier) than anticipated. 

Older senior couple sitting on bench at the beach.

Image source: Getty Images.

You may not be able to stick it out until 65

If you aren't near retirement but are hoping to work until 65, you may find that you can't actually make that happen.

Many people need Social Security in retirement because they don't have enough income without it. And, unfortunately, health issues, a lack of employment opportunities, or the need to serve as a caregiver for a family member end up forcing many people to retire before 65.

Social Security benefits are available starting at 62. If you can't wait to retire, you may end up having to rethink your plans to claim benefits at 65 because circumstances force you to start them at an earlier age. 

You may decide you want to wait longer

If you're lucky enough to make it to 65 without having to claim Social Security out of necessity, you may still decide it's not the ideal age to start benefits. 

That's because 65 is no longer the standard retirement age. Your birth year determines when your "full retirement age" (FRA) is, but it's between 66 and 2 months and 70 now. If you want your full benefit, you'll have to wait until you hit it. 

Benefits are reduced by a small amount each month if you start them early, with the reduction adding up to around a 6.7% annual cut for each of the first three years (and an additional 5% per year if you're more than three years early). Since your FRA is at least a year after your 65th birthday, you'd be reducing benefits permanently if you didn't wait longer. 

And retiring before FRA also has other consequences. If you planned to work while getting benefits, you can earn as much as you want without affecting your Social Security checks as long as you've already reached full retirement age. But if you retire at 65, you won't have hit that milestone. 

That means earning too much could cause you to temporarily forfeit some Social Security income. Eventually, you can get back the money over time because benefits will be recalculated at FRA to account for it. But in the meantime, your income may be lower than anticipated. 

Instead of starting benefits at 65 and accepting a permanent benefit reduction and limitations on your ability to work, you may want to consider waiting until at least your full retirement age (or possibly even claiming Social Security as late as 70 instead). 

When you end up with a higher monthly check later, you may be very glad that you rethought your initial plans. 

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