In the past, people assumed that they would retire by the age of 65 and start receiving full Social Security retirement benefits right away. However, nowadays, full retirement benefits are not as accessible as they were back in the day. For instance, currently, if you were born in the year 1960 or any year thereafter, the age at which point full retirement benefits are accessible is 67.
If you decide to accept Social Security retirement benefits earlier rather than later, the amount that you’ll receive will be much less than the full retirement benefit amount. Even though the amount will be lower, you’ll receive the benefits for a longer period of time, so it’s a matter of receiving lower payments across a longer timeline.
The reverse is also true. If you reach age 67 and you begin accepting Social Security benefits, your payments will be larger, but you will receive fewer payments due to the shorter period of time. The amount of money that you’ll receive when you begin receiving benefits will set the precedent for the benefit amount that you will receive for the rest of your life.
What to consider when deciding if you should take out Social Security benefits
- What is your current employment status?
- With your health in mind, do you know what your life expectancy is projected to be?
- If you choose to retire, will you lose your health insurance?
- Are you eligible for benefits yet?
- Do you have additional income streams that can support you if you don’t take benefits?
- Will any of your family members be able to qualify for your benefits?
If you start getting benefits at age 62 and you are a wage earner, your retirement benefit is reduced to 70%. And here’s how the sliding scale works: at age 63, you’ll receive 75%; at age 64, 80%; at age 65, 86.7%, and at age 66, 93.3%.
What to consider if you choose to wait longer
It’s important to recognize that even if you were to retire by the age of 67, you might end up leaving money on the table that you could otherwise take home with you. If you postpone your acceptance of Social Security benefits and refrain from taking them until you turn 70 years old, your Social Security benefits will be increased by two-thirds of 1% for a total of 8% per year that you wait. So, people who turn 67 and do not claim benefits for three years will receive an extra 24% of their original benefits as part of their eventual monthly payments. However, these increases are halted once you turn 70.
When it comes to determining the best age to take Social Security benefits, there is no one-size-fits-all decision. It’s entirely up to you, and your decision should be based solely on your specific circumstances. Make it a point to formulate as informed of a decision as possible. Ultimately, your decision will be incredibly reliant on your circumstances. Legally, there is not a singular correct age at which you must claim your benefits. In fact, the best plan of action is to wait to claim benefits for as long as you can afford to do so.
How running the numbers can help you finalize your decision
If you have not signed up for an SSA account yet, it is advisable that you do so. Navigate to the Social Security website and set up an account for yourself. By doing so, you will have access to your current retirement status, and you’ll have the ability to see how much you would receive each month were you to begin accepting benefits now as opposed to if you were to wait until the full age of retirement.
Making a decision as to when you will start accepting retirement benefits is as important as it is personal. By exploring the information provided on the official Social Security website, you will be exposed to all of your options and consider all of the possibilities before you make your final decision.
If delaying retirement seems like the better option for you, that’s great — just make it a point to sign up for Medicare when you turn 65 years old. Another wise move to make is to work closely with trusted financial professionals who can help you make a decision that suits your situation the best.