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You can choose to start collecting Social Security benefits at any time between the ages of 62 and 70. Because the Social Security Administration has no way of knowing when you want your benefits to start, enrollment is not automatic. Here's what you need to know about the process of starting Social Security retirement benefits, and what you should consider when deciding the best time to apply.
How to apply for benefits
You can apply for Social Security retirement benefits as early as 61 years and nine months of age, up to four months in advance of the month you want your benefits to start. For example, if you want to start collecting Social Security at age 65, you can apply as early as 64 years and eight months of age.
The easiest way to apply for Social Security is online. The Social Security Administration (SSA) allows you to apply for retirement, spouse's, Medicare, or disability benefits online. The entire application takes about 15 minutes, and there are no forms to sign. While there are generally no documentation requirements after filling out the online application, the SSA may ask to see your birth certificate, W-2, tax return, or other documents in order to verify your information.
If you don't want to apply online, you can also apply by phone or in person at your nearest Social Security office, although the SSA advises you call to make an appointment first.
Things to consider: The effects of early or late retirement, and working after enrolling
Your Social Security benefit is based on your average inflation-indexed earnings throughout your career, which are then applied to a formula to determine your primary insurance amount (PIA), the monthly benefit to which you would be entitled if you retired at your full retirement age. The full (also known as "normal") retirement age is 66 for those born in 1954 or earlier, and it will gradually increase to 67 for people born in 1960 or later.
If you retire early, your benefit will be less than your primary insurance amount by 6.67% for each year before full retirement age, up to a maximum of three years early. Beyond three years, your benefit will be further reduced by 5%. On the other hand, if you choose to retire after your full retirement age, your benefit will be permanently increased by 8% per year up until age 70. All of these percentages are prorated on a monthly basis if you retire early or late, but not by a whole number of years.
Another consideration is whether or not you should file for retirement benefits if you're still working. Specifically, if you start collecting Social Security benefits before attaining full retirement age, any earnings above a certain threshold can reduce your monthly benefit. For 2016, if you will reach full retirement age after this year, any earnings above $15,720 will reduce your benefits by $1 for every $2.
Finally, it's worth mentioning that theoretically, it doesn't matter when you start collecting Social Security. The whole reasoning behind the reductions and increases for early or late retirement is so you'll get the same lifetime total, regardless of when you start collecting. Even if your benefits are reduced by the earnings test, it can have the effect of permanently increasing your benefit once you reach full retirement age.
Make the best decision for you
The bottom line is that you have an eight-year window during which you can choose to start collecting Social Security benefits, so take a look at your finances, health, and other life situations in order to make the best choice for you and your family. For example, if you don't have quite as much saved for retirement as you'd like, it may be in your best interest to work for a few extra years and let your benefit grow. Conversely, if you're financially comfortable or aren't in good enough health to keep working, applying early may be the way to go.
In a nutshell, because there's no one-size-fits-all age at which it's best to start collecting Social Security, enrollment is not automatic. Take advantage of this fact and plan your Social Security payments to fit your own life.
