When to Claim Your Social Security Benefits & Your Legal Options
The age at which you start collecting your Social Security retirement benefits will affect the amount of benefits that you receive each month. You can start collecting them when you turn 62, which is known as the early retirement option. Or you can start collecting them at your full retirement age, which you will reach at 66 or 67, depending on when you were born. If you start collecting them after your full retirement age, this is known as late retirement.
The Differences Among Early, Full, and Late Retirement Options
Collecting your retirement benefits early means that you will receive 25 percent less than if you waited until your full retirement age. The penalty increases to 30 percent for people born in 1960 or later. You will receive this reduced amount permanently, not just until you reach your full retirement age.
If you collect benefits at your full retirement age, you will receive the standard amount. If you use the late retirement option, you will receive an increase in benefits by eight percent per year until you turn 70. There is no advantage to waiting until after age 70. The Social Security system also takes cost of living increases into account and adjusts payment amounts over time.
You can consult the Social Security Administration website for guidance on calculating your potential retirement benefits according to the age at which you start collecting them. Also, you can view your Social Security Statement online or in printed form to see the differences among receiving benefits at 62, at full retirement age, or at 70. You will receive a free printed version of this statement before you turn 25, 30, 35, 40, 45, 50, 55, and 60, as well as each year after you turn 60.
You may feel inclined to wait for as long as possible to collect your benefits so that you can maximize them, but this is not the right choice for many people. Between 40 and 50 percent of eligible claimants start receiving benefits at the earliest possible opportunity when they turn 62. If you are suffering from serious medical conditions and do not expect to live long past retirement, this may be the right choice. The system is meant to provide the same total amount to people who reach their average life expectancy, regardless of when they retire. Thus, your decision may come down to whether you anticipate reaching your average life expectancy. In other situations, an aging person who lacks the resources to pay for necessities may want to claim benefits as soon as they are eligible. (They also may want to continue working if they are physically able, just to bolster their financial security.)
On the other hand, you may not want to collect benefits early or even at your full retirement age if you can support yourself comfortably and expect to reach or surpass your average life expectancy. Any amount that you earn by investing your retirement benefits probably would not equal the automatic increases under Social Security rules. If you are still able to work and earning a substantial income, you may want to wait so that you can add more years of income to the benefits calculation. Your benefits are based on the average of your top 35 earning years. If you claim benefits early but continue working, the SSA will deduct one dollar in benefits for every two dollars earned over its earnings limit. This deduction will not apply to people who keep working after reaching their full retirement age.
Retirement Timing Considerations
Income and resources without Social Security
Ability to continue working
Health and life expectancy
Potential survivor benefits for family members
Sometimes family considerations can play a role. If you have contributed much more to Social Security than your spouse has, you may want to wait until full retirement age or beyond to claim your benefits. This will allow your spouse to get a greater survivor benefit if you die before they do, which is especially likely if the husband is the higher earner. The age at which you claim benefits does not affect dependent benefits for your spouse and children, though.
Claiming and Suspending Benefits
You have an option to claim your benefits when you reach your full retirement age and suspend them until you want to start collecting them. If you claim and suspend your benefits, you can start collecting them by notifying Social Security at any time.
If you claimed and suspended your benefits before April 30, 2016, you can reinstate your benefits and get a lump sum payment that accounts for all of the payments that you would have received if you had started receiving benefits at your full retirement age. Your monthly payment then would revert to the amount that it would have been if you had started receiving benefits when you reached your full retirement age.
If you claimed and suspended your benefits on or after April 30, 2016, you can contact Social Security to start collecting benefits, but you will not receive a lump sum payment for any previous months. You will receive the benefits to which you are entitled as of the month after your request to reinstate your benefits.
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