Deciding when to claim Social Security benefits is a major decision that can significantly impact your retirement income. The ages of 62, 67, and 70 are key milestones to consider. You can start receiving Social Security benefits at age 62.
However, this is considered early and can result in a reduction of up to 30% in your monthly benefits. If you were born in 1960 or later, your Full Retirement Age (FRA) is 67. Waiting until your FRA ensures you receive the full benefit amount you’re entitled to based on your work history.
Delaying your claim until age 70 can result in higher monthly payments. This maximizes the Social Security benefit amount you receive. However, waiting beyond age 70 does not provide any additional increases.
Katie Brewer, CFP and founder of Your Richest Life, says, “There are more rules and restrictions if you take Social Security early at age 62, and fewer restrictions if you wait until your full retirement age.
Deciding when to claim benefits
For 2024, if you are under full retirement age for the entire year, $1 is deducted from your benefit payments for every $2 you earn above the annual limit of $22,320.”
Several factors should be considered when deciding when to claim Social Security:
Your life expectancy is important.
If you have health concerns or a shorter life expectancy, claiming earlier might make sense for you. Your financial needs also play a role. If you need the income sooner rather than later, you might have to claim early despite the reduction in benefits.
Your work status matters too. If you are still working and earning above the earnings threshold, it may be beneficial to wait until your FRA to claim Social Security. If you are eligible for spousal benefits, keep in mind that delaying them doesn’t increase the amount.
It’s important to run the numbers to see if claiming spousal benefits earlier makes sense in your situation. Ultimately, the right time to take Social Security depends on your unique financial needs, life expectancy, and employment status. Consulting with a financial planner can help you coordinate when to claim Social Security benefits with your overall retirement income strategy.
