Many people take Social Security benefits as soon as they are eligible to begin receiving them, which for many Americans is age 62. But just because you can begin receiving Social Security benefits doesn’t mean you should take them right away. For example, you can often increase your Social Security payments by delaying when you receive them. Here are a few things to think about concerning when to begin receiving Social Security Benefits.
When Should You Take Social Security Benefits?
Delaying when you take Social Security Benefits can result in higher payments. In general, you can begin receiving Social Security Benefits at age 62, but in many cases, it’s worth delaying your start date for receiving Social Security payments if possible. This is because the Social Security Administration uses a sliding scale based on the year of your birth to determine your “normal” retirement age and the amount of money you will receive. Taking Social Security Benefits at age 62 may cause you to only be eligible to receive a partial payment.
Social Security normal age of retirement
Until 2002, the “normal retirement age” for everyone was at the age of 65. According to the Social Security Administration, the “normal retirement age” is the age a which beneficiaries receive full Social Security Benefits. The list below shows the “normal retirement age” based on the year you were born.
- 1937 or earlier – 65 years of age
- 1938 – 65 and 2 months
- 1939 – 65 and 4 months
- 1940 – 65 and 6 months
- 1941 – 65 and 8 months
- 1942- 65 and 10 months
- 1943-1954 – 66 years of age
- 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 years of age
Taking benefits early can reduce Social Security payments
You will receive reduced benefits if you decide to take Social Security benefits before the time of your normal retirement age. The total amount is reduced by five-ninths of 1% for each month you are under your normal retirement age, up to 36 months. If you are to receive benefits and you start more than 36 months before retirement age, your benefits will be further reduced by an amount of five-twelfths of 1% a month. Here is more information about age reduction of Social Security Benefits.
Good things come to those who wait
In general terms, you can increase Social Security benefits by waiting a few years to begin receiving them. If you accept your benefits after reaching your normal retirement age, you’ll get the full amount due to you with no reduction. You can even get additional Social Security credits be delaying your benefits start date after your normal retirement age. You will receive an additional percentage on your monthly Social Security check with each month you delay until you reach age 70.
Note: Military members who served between the years of 1940 and 2001 may receive additional Social Security credits for military service. You can read more about this benefit in this article: How Military Service Affects Your Social Security Benefits.
Considerations before you take Social Security Benefits
If you are unsure of where you stand with benefit amounts, you can contact the Social Security Administration to request a copy of a current statement of benefits. Your individualized statement will include pay outs for benefits taken at age 62, at your normal age of retirement, and at the age of 70. Statements are mailed annually but additional copies can be requested.
You’ll need to assess your own financial situation to determine your need and time frame for benefits. If you have the means to support yourself, wait as long as you can to request benefits. If you are still working, understand that your benefits may be reduced if you take them before your retirement age. For every $2 you earn in above the annual allowance, you will lose $1 in benefits. At the normal retirement age, you will lose $1 for each $3 you earn above a higher limit for income earned before the month you reach your retirement age.
If you can not live without the additional funds even before reaching your normal age of retirement, you should consider taking the reduced benefit payments to stay on track financially. The decision should be based on your needs, the age of your spouse, and even your life expectancy based on your present medical situation and family history.