One of the most important decisions you'll have to make as you approach retirement is when to start Social Security benefits. The soonest you can begin claiming is 62, which remains the most popular age to start. It's not necessarily the wrong choice -- you'll still get a sizable amount of money over your lifetime -- but it might not be the best option if you're interested in maximizing your benefits. Here's a closer look at how the age you begin Social Security affects the size of your checks.
The all-important full retirement age (FRA)
The Social Security Administration assigns everyone a full retirement age (FRA) based on his or her birth year. It's 66 for those born between 1943 and 1954. Then it rises by two months per year until it reaches 67 for those born in 1960 or later. This is the age at which you're eligible for your scheduled benefit based on your work record, and it's where the Social Security Administration starts when calculating your benefit at any age. First, it figures out how much you'd get if you began claiming at your FRA, and then it calculates how much more or less you're entitled to depending on when you start claiming.
The earlier you begin Social Security, the smaller your checks will be. For every month you claim benefits before your FRA, you'll shrink your checks by five-ninths of 1% for up to 36 months. If you begin benefits more than 36 months before your FRA, you'll lose an additional five-twelfths of 1% per month.
Delaying benefits will increase your checks by two-thirds of 1% per month for every month that you delay benefits past your FRA. You'll max out at 70. You aren't required to sign up for Social Security at that point, but there's really no need to delay benefits further, because you won't get any additional benefit.
The following chart should help you visualize how your starting age affects your benefits. It illustrates how much different starting ages from 62 to 70 reduce or increase the size of your Social Security checks depending on your FRA.
If You Start Social Security at...
...And You Have an FRA of 66
...And You Have an FRA of 67
Normal amount based on work record
Normal amount based on work record
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So, for example, someone with an FRA of 67 who begins benefits at 62 will get only 70% of the amount he or she would have gotten per check as opposed to begin claiming until 67.
You can start benefits at any age -- say, 62 and three months or 65 1/2 -- and every month that you delay benefits will increase your checks. Use the preceding calculations to estimate how starting at any age might affect your checks. And if you want to figure out how much money you can expect from Social Security at your FRA, 62, or 70, try making a My Social Security account.
Which starting age is best?
There isn't a right or wrong age to start Social Security. In any case, you'll get checks every month. But if you want to maximize your benefits, you have to think about your life expectancy. It makes sense to start Social Security early if you don't expect to live long. If you try to delay benefits, you might die before you ever get around to claiming them. You might as well get as much out of the program as you can.
But if you expect to live a long life, delaying benefits will probably get you more money over your lifetime. To estimate which starting age will give you the most money overall, multiply your monthly Social Security checks at different starting ages by 12 to get your estimated annual benefits and then multiply that by the number of years you expect to receive benefits, to see which starting age will give you the most money overall. For example, if you expect a $1,500 monthly benefit at 67 and believe you'll live for 20 more years, you'd multiply the $1,500 by 12 to get an estimated annual benefit of $18,000 and then multiply that by 20 for an estimated lifetime benefit of $360,000.
Delaying Social Security might not always be possible, especially if you weren't able to save as much for retirement as you'd hoped when you were younger. In that case, you may have to begin early and accept smaller checks. Couples might be able to soften the blow by having only one spouse begin benefits early, enabling the other to delay benefits until their FRA or beyond to get larger checks.
It's fine to begin Social Security at 62 if that's what you want or need to do, but make sure you understand the consequences of that decision. It's going to affect you for the rest of your life, so it's not something to be taken lightly.
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