Deciding when you should start receiving your Social Security benefits is a critical part of retirement planning. If you choose to draw Social Security before you reach full retirement age, you get a reduced benefit. Opting to wait beyond the age where you cross the threshold comes with higher payments. It may also mean you might need to delay your retirement if you don’t have other sources of retirement income. Regretfully, there is no hard and fast rule when it comes to when you should draw Social Security. However, it is possible to examine the situation and make a decision that is right for you. Here’s how.

Know Your Full Retirement Age

Reaching full retirement age (or “normal retirement age”) is often a factor people examine to decide when to take Social Security benefits. While the full retirement age used to be 65 for everyone. Now the age which that occurs varies depending on the year you were born.

Anyone born in 1950 or earlier is already at full retirement age based on the Social Security Administration’s definition. For individuals born between 1951 and 1954, 66 is the normal retirement age.

Starting in 1955, the full retirement age scales up in 2-month increments. For example, those born in 1955 qualify at age 66 and two months. If you were born in 1958, you have to wait until age 66 and eight months to be eligible for full retirement benefits. Anyone born in 1960 or later reaches full retirement age when they turn 67 years old.

Here’s an overview of when people reach full retirement based on their birth year:

Birth Year Full Retirement Age
1950 or earlier Already at full retirement age
1951-1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 or later 67

Choosing to draw Social Security before or after the ages above impacts your benefit. Before you select a different age to start, you need to know how it affects your retirement.

Drawing Social Security Early

You do have the option of drawing Social Security before you reach the full retirement age as long as you are at least 62 years old. However, it results in a reduced benefit.

For individuals with a full retirement age set at 66, your benefits are reduced as follows:

  • 25 percent reduction at age 62
  • 20 percent reduction (approximately) at age 63
  • 3 percent reduction (approximately) at age 64
  • 7 percent reduction (approximately) at age 65

Individuals with a full retirement age of 67 can still draw Social Security early once they are 62.  They must understand that the reduction in the benefit is larger. For anyone born in 1960 or later, the maximum reduction is capped at 30 percent.

It’s important to understand that the reduction is typically permanent. Although you can repay your Social Security benefits and set a new start date resulting in a higher benefit for the remainder of your life, it isn’t a plausible option for many retirees.

Drawing Social Security Late

While receiving Social Security benefits early comes with a benefit, waiting until after your full retirement age passes can also be beneficial. As you wait, you earn delayed retirement credits, which result in a boost to your payments when you decide it’s time to draw Social Security.

For every year you wait beyond your full retirement age, you receive a benefit increase of 8 percent. For example, if your full retirement age is 67, and you wait until you are 70 to claim your benefits, your monthly payment is 24 percent higher.

However, once you reach age 70, there is no additional increase for waiting. While you aren’t required to file for benefits at that time, delaying any further doesn’t give you any more increases, so you are simply missing out on money that could boost your income.

Figuring Out Your Benefits

Since knowing what you could receive from Social Security will play a big role in your retirement decision, you need to examine your account. Every person’s situation is unique, and your financial benefits are based on your past earnings and work credits.

You can receive a personalized estimate from the Social Security Administration through the mySocialSecurity portal. This will give you a clearer picture of where you likely stand before you request any benefits or do any additional planning.

Additionally, your mySocialSecurity account will also show you what your benefits would look like if you retired at age 62 or 70. Although it is based on some assumptions about your earnings going forward, it is a helpful tool.

Making the Decision

Once you have a solid understanding of your potential Social Security benefits. You can start figuring out what age makes sense for you. Usually, you want to examine your other sources of income, such as retirement accounts or work-related earnings, once you reach age 62 as a starting point. You should also reflect on your planned retirement lifestyle, as this may impact how much you need on a monthly or annual basis to live how you’d like.

If you have other retirement accounts that can sustain you or plan to keep working, delaying might be a wise move. It allows you to receive a larger monthly payment for the rest of your life, which may make it easier to live without a traditional income.

However, if the idea of retiring early is appealing (or necessary, such as for a health reason), you might want to file earlier. This may be a viable option for those whose expenses will be far reduced in retirement, might only want to work part-time, or need to leave the workforce and require a reliable source of income.

Just be aware that filing before your full retirement age means your benefit is reduced, so make sure to consider that before going forward. Additionally, if you retire early and continue working, you might have to deal with a benefit reduction. In 2019, if you retire before full retirement age, for every dollar you earn above the annual limit of $17,640, your benefit reduces by $1 for every $2 you make.

Ultimately, choosing when to start receiving Social Security benefits is a personal decision. You need to examine your financial situation and figure out what is best for you today, tomorrow, and well into your retirement years.

Do you already draw Social Security? If so, at what age did you start? If not, at what age do you plan on drawing Social Security? Share your thoughts in the comments below.

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