Choosing when to begin taking Social Security is one of the most important decisions in your retirement journey, as it will significantly affect your monthly income.
You can file for benefits at age 62 or anytime thereafter, but the earlier you begin claiming, the smaller your monthly payments will be. Still, age 62 is the most popular age to file, with more than one-third of older adults claiming at this age, according to a 2020 survey from the Bipartisan Policy Center.
While there's nothing necessarily wrong with claiming early, there is a common misconception that often trips retirees up -- and it has to do with knowing your full retirement age.
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How your full retirement age affects Social Security
Your full retirement age (FRA) is the age at which you'll receive the full benefit amount you're entitled to based on your work history and earnings record.
Your exact FRA is determined by your birth year. Everyone born in 1960 or later has an FRA of 67 years old, while those born before 1960 will have an FRA of either 66 or 66 and a few months.
File for Social Security before your FRA, and your benefits will be reduced. But a common misconception is that you'll only collect smaller checks until you reach your FRA, at which point you'll begin receiving your full benefit amount.
Around half of U.S. adults believe this is true, according to a 2022 survey from the Nationwide Retirement Institute. This means millions of seniors could be claiming early expecting their benefits to increase in a few years.
In reality, though, these benefit reductions are permanent -- even once you reach your FRA. If you choose to claim early, you'll collect smaller checks each month for the rest of your life.
Should you still claim early?
There are good reasons to claim Social Security early, but there are also times you may want to consider waiting.
Benefit cuts by claiming early can significantly reduce your monthly income. If your FRA is 67 years old and you file at 62, your benefits will be permanently reduced by 30%. That can amount to hundreds of dollars per month, and if you're going to be relying heavily on Social Security in retirement, claiming early could make it harder to make ends meet.
In this situation, delaying benefits can be a smart move. By waiting until age 70 to file, each month you'll collect your full benefit amount plus an additional 24%, assuming you have an FRA of 67. This benefit boost is also permanent, so you can expect larger checks for the rest of your life.
That said, claiming early can still be a wise decision in some cases. If you're forced into early retirement, for instance, filing early can help you avoid draining your savings too quickly. Or if you have reason to believe you might not live a longer-than-average lifespan, claiming early can give you more time to enjoy your money.
The right decision for you
There's no one-size-fits-all approach to deciding when to take Social Security, as it will depend on your unique situation. But knowing how your age will affect your benefit amount is crucial.
If you choose to claim early, that could be a smart move for your retirement. Just be sure you're not expecting a benefit increase later in life, and you can head into your senior years as prepared as possible.
