As of age 62, you may be eligible to claim Social Security benefits. Deciding when to begin taking Social Security benefits requires careful consideration and planning, and starting this process early can be advantageous. Below is a quick overview of important factors for you to consider.
The Basics
Workers who have contributed to the Social Security system for at least 10 years are entitled to claim an "Old-Age Benefit" (also known as the "Primary Insurance Amount" or PIA) upon reaching "Full Retirement Age" (FRA). Your FRA ranges from 66 to 67 years, depending on your year of birth. For those reaching FRA in 2023, the maximum Social Security benefit is $3,627 per month.
While you may begin claiming benefits as early as age 62, doing so before reaching your FRA will result in a permanently reduced benefit. For example, if your FRA is 67, starting benefits at 62 would reduce your PIA to 70%. On the other hand, delaying benefits beyond your FRA—up to age 70—will increase your benefit amount by approximately 8% each year, reaching up to 124% of your PIA at age 70.
When to File
Deciding when to claim your Social Security benefits is a multifaceted decision, and I’m here to help you navigate it. An early claimer starts receiving benefits sooner but may ultimately collect less over time compared to someone who waits until their FRA or even age 70. Because later claimers receive a larger yearly benefit, they may “catch up” or exceed the total benefits received by an early claimer.
Here are three key questions we’ll explore together:
- When will you need Social Security benefits to support your lifestyle?
- What is your life expectancy or family health history to consider?
- What after-tax investment return can you reasonably expect to earn on your savings?
By answering these questions, we can create a strategy that aligns with your financial goals and maximizes your Social Security benefits over your lifetime.
Conclusion
Choosing when to claim Social Security benefits is a pivotal decision in your retirement planning journey. The right timing can significantly impact your lifetime benefits, so taking the time to make a well-informed choice is worth the effort.
For additional information and to estimate your personal benefits, visit www.ssa.gov/myaccount and check out the Social Security Administration’s benefit reduction chart at www.ssa.gov/benefits/retirement/planner/agereduction.html.
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