Jacob Wolinsky
The question of when to take Social Security benefits is a tricky one. The short answer is that you first become eligible to start taking benefits when you turn 62. Full retirement age is between 66 and 67, depending on your birth year, and that's when you can claim your full, unreduced retirement benefits.
Although age is one of the most important factors in determining when you should start taking benefits, it's not the only one. Are you still working? The earnings test will show you how your income might be reduced. And don't forget to consider other tax implications and how starting benefits might affect spousal benefits.
Although age 62 marks the beginning of eligibility for Social Security, it does not put you at "full retirement age" (FRA). In other words, you won't become eligible for full benefits, unreduced, until you reach your FRA, which depends on your birth year.
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Here is a summary of when you will reach your FRA, by birth year.
If you were born:
- In 1960 or later, your FRA is age 67.
- In 1959, your FRA is age 66 and 10 months.
- In 1957, your FRA is age 66 and six months.
- In 1956, your FRA is age 66 and four months.
- In 1955, your FRA is 66 and two months.
- Between 1943 and 1954, your full retirement age (FRA) is age 66.
Here's what happens if you start tapping Social Security at age 62
Claiming your Social Security at age 62 will dramatically decrease the amount of your monthly payments, which is why many retirees wait as long as possible to start tapping benefits. If you start receiving benefits early, your check will be reduced for each month you took benefits before your full retirement age. You lose 5/9 of 1% for each month before your FRA, for the first 36 months, and 5/12 of 1% for each additional month.
For example, if you were born after 1960, your full retirement age is 67. If you start your benefits at age 62, a $1,000 monthly benefit would be reduced by 30% to $700. And if you are married, your spouse's monthly benefit would drop from $500 to $350. This would result in your total family income from Social Security being $450 less than if you had waited until your FRA.
Take a look at the Social Security Administration's (SSA) "Full Retirement and Age 62 Benefit By Year Of Birth" table, which shows what your percentage benefits would be reduced by based on the year you were born.
Another helpful tool is the SSA's Retirement Age Calculator, which provides two important numbers. First, it calculates your full retirement age, as you might expect. Second, it generates a table showing the percentage decrease in benefits you and your spouse would receive for each year and month you retire before your FRA.
That said, there are some valid reasons to take Social Security early; for example, if you are in poor health, no longer want to work, or have caregiving responsibilities. But be careful, because it is costly to stop and restart Social Security once you have claimed benefits. You'd have to repay what you've received to reverse that decision.
Why it might make sense to wait
If you wait until age 70 to start taking Social Security, your monthly payments will increase. This is one reason many seniors wait to start claiming benefits, especially if they’re in good health or have other sources of income.
For example, those born in 1943 or later will see a 12-month rate of increase of 8%. This rate falls to 7.5% for those born in 1941 and 1942 and 7% for those born in 1939 or 1940. However, those increases stop when you reach age 70, so it doesn't make sense to wait beyond age 70.
Alternatively, many retirees split the difference between 62 and 70, tapping benefits starting at age 65. Why? At age 65, you become eligible for Medicare. This coverage relieves retirees of having to find and buy health care coverage.
Turning 67 in 2025?
The age to collect full Social Security benefits has been moving from age 65 to age 67 incrementally since 1983. Turning 67 in 2025 is a critical point in retirement planning for those born in 1958, if you haven't already applied to collect your Social Security benefits.
Here are three important things to be aware of as you celebrate your 67th birthday:
Your true full retirement age. If you are turning 67 in 2025, you'll be past full retirement age (FRA) for Social Security purposes. FRA is 66 and 8 months for people born in 1958. So if you decide to claim benefits in 2025, you'll be eligible for those benefits in full without a reduction. You'll be looking at a boosted benefit because you'll be filing after your precise FRA.
You'll get an extra 2/3 of 1% for each month you delay after your FRA. If you begin collecting benefits at 67, you are choosing to receive benefits four months after you reach your FRA of 66 and 8 months. Your benefit will be 102.7% or 2.7% more than your primary insurance amount.
Delaying Social Security until age 70 will further increase your lifetime benefit. While you get an extra 2/3 of 1% for each month you delay after your birthday month, you can further increase your benefit up to 8% for each full year you wait until age 70. If you wait until 70 or later, your monthly benefit is 126.7% or 26.7% higher than if you started to collect benefits at your FRA of 66 and 8 months.
If you're still working, it especially pays to let your Social Security benefit grow if your paycheck allows you to cover your expenses. The more monthly Social Security income you can set yourself up with, the better off you will be financially as you age.
You'll need to sign up for Medicare if you retire and lose your employer health insurance. Medicare eligibility begins at age 65. You have a six-month window to enroll that starts three months before the month of your 65th birthday and ends three months after that month. Be careful because if you don't sign up for Medicare on time, you risk a lifelong surcharge on your Part B premiums.
The penalty is waived if you're still covered by a qualifying group health plan at the time of your initial enrollment window.
If you are planning to retire in 2025 and must give up your group health coverage, you'll need to look into Medicare enrollment. You get an eight-month special enrollment period (SEP) that begins the month after your group health coverage ends.
How to decide when to start taking Social Security benefits
There is no one-size-fits-all solution; deciding when to start taking benefits is a critical and personal choice that depends on multiple factors. For example, you'll need to consider the size of your nest egg, how long you plan on working and the state of your health.
The bottom line is that the earlier you start taking Social Security, the longer you will receive monthly payments. However, your monthly payments will be permanently reduced for every month you start before your FRA. On the other hand, your benefit would increase for every month you waited beyond your FRA.
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