Advice from the Social Security Administration can guide your decision
One of the most vexing questions for anyone planning for retirement is: “What’s the best age to start receiving Social Security benefits?” You’ve probably heard that you can begin receiving Social Security benefits at age 62, and that is true. But the benefits are “reduced” until you reach what’s called “full retirement age.”
Here is what the Social Security Administration says – and it can help guide your decision as you and your financial advisor build your retirement plan:
When to start receiving retirement benefits
“At Social Security, we’re often asked, “What’s the best age to start receiving retirement benefits?” The answer is that there’s not a single “best age” for everyone and, ultimately, it’s your choice. The most important thing is to make an informed decision. Base your decision about when to apply for benefits on your individual and family circumstances. We hope the following information will help you understand how we fit into your retirement decision.
Your decision is a personal one
Would it be better for you to start getting benefits early with a smaller monthly amount for more years or wait for a larger monthly payment in a shorter timeframe? The answer is personal and depends on several factors, such as your current cash needs, your current health, and family longevity. Also, consider if you plan to work in retirement and have other sources of retirement income.
You must also study your future financial needs and obligations and calculate your future Social Security benefits. We hope you’ll weigh all the facts carefully before making the crucial decision about when to begin receiving Social Security benefits. This decision affects the monthly benefit you will receive for the rest of your life and may affect benefit protection for your survivors.
Your monthly retirement benefit will be higher if you delay starting it
Your full retirement age varies based on the year you were born. You can visit www.ssa.gov/benefits/ retirement/planner/ageincrease.html to find your full retirement age. We calculate your basic Social Security benefit — the amount you would receive at your full retirement age — based on your lifetime earnings. However, the actual amount you receive each month depends on when you start receiving benefits. You can start your retirement benefit at any point from age 62 up until age 70. Your benefit will be higher the longer you delay starting it. This adjustment is usually permanent: it sets the base for the benefits you’ll get for the rest of your life. You’ll get annual cost-of-living adjustments and, depending on your work history, may receive higher benefits if you continue to work. The following chart shows an example of how your monthly benefit increases if you delay when you start receiving benefits.
Let’s say you turn 62 in 2023, your full retirement age is 67, and your monthly benefit starting at full retirement age is $1,000. If you start getting benefits at age 62, we’ll reduce your monthly benefit 30% to $700 to account for the longer time you receive benefits. This decrease is usually permanent.
If you choose to delay getting benefits until age 70, you would increase your monthly benefit to $1,240. This increase is the result of delayed retirement credits you earn for your decision to postpone receiving benefits past your full retirement age. The benefit at age 70 in this example is about 77% more than the benefit you would receive each month if you start getting benefits at age 62 — a difference of $540 each month.
Retirement may be longer than you think
When thinking about retirement, be sure to plan for the long term. Many of us will live much longer than the “average” retiree and most women live longer than men. About 1 out of every 3 65-year-olds today will live until at least age 90, and 1 out of 7 will live until at least age 95. Social Security benefits, which last as long as you live, provide valuable protection against outliving savings and other sources of retirement income.