The Right Age to Take Social Security Retirement Benefits

As you get older, you start thinking more about retirement distributions than contributions. One of the biggest questions that near-retirees have is, “What is the right age to start collecting Social Security benefits? Most take the benefits right away, but that isn’t always the right option. You can start collecting Social Security benefits any time between ages 62 and 70. Let’s take a look at how Social Security works, and what you need to know when deciding the right age for your retirement.

A financial advisor can help you optimize a plan for your retirement needs.

How Social Security Works

Social Security is meant to supplement your retirement income and ease financial concerns as you get older. It’s essentially a support system for America’s elderly, enabled by the 1935 Social Security Act. Most beneficiaries are retirees and their families. However, disabled individuals and survivors of workers who have died are also eligible to collect Social Security benefits.

Workers make Social Security contributions each month, which appear on your paycheck as Federal Insurance Contributions Act (FICA) taxes. Upon retirement, you can begin to receive Social Security payments, which will continue throughout the rest of your life. How much you receive each month, however, depends on when you elect to begin taking benefits and whether you’ve reached full retirement age at that point.

Full retirement age is the age at which you become eligible to start receiving full retirement benefits. It was 65 for many years, but the Social Security Administration amended that rule in 1983 because of increases in average life expectancy.

Now, depending on the year you were born, you reach full retirement age sometime between 65 and 67. The full retirement age rises gradually from 1938 onward. Anyone born after 1960 reaches full retirement at 67. The Social Security Administration table below breaks down full retirement benefits for different age groups:

Social Security Administration Retirement Benefits

The Right Age to Take Social Security

The right age for taking Social Security benefits depends on personal and financial factors, like your current cash needs, retirement plans, health and family history. Be sure you weigh the decision carefully and don’t hesitate to find a financial advisor to talk to if need be. The age you choose to start taking Social Security will affect the monthly amount you receive for the rest of your life.

What to Consider When Deciding the Right Age for Social Security Benefits

You’ll receive reduced monthly benefits permanently if you start taking them before you reach full retirement age. And the reductions aren’t small. This breakdown summarizes how much you can lose (or gain) depending on when you get your retirement benefits:

• Benefits are reduced by 30% if you opt to start receiving benefits just five years early.
• If you wait until you full retirement age you’ll receive 100% of your benefits.
• You can also elect to postpone benefits beyond full retirement age, up until you are 70.
• The monthly amount you will receive in the future increases each month you wait to start receiving benefits.
• If you can wait until the last possible month, your check will be 132% of the full retirement benefit.

For a fuller comparison, this table from the Social Security Administration shows how much you could get if you retire at age 62 based on your birth year:

Social Security Administration Early Retirement at Age 62

So, it’s almost always best to delay Social Security benefits for as long as you can. If you plan to work in retirement, you’ll definitely want to delay. You’ll face a penalty if you continue to work after you claim early retirement benefits and earn more than the yearly earnings limit, which for the 2023 tax year is $21,240. This means that the Social Security Administration will deduct $1 from benefits for every $2 that you earn over $18,960. For the 2024 tax year, the yearly earnings limit will be $22,320.

And, if you reached full retirement age in 2023, the Social Security Administration raised the earnings limit up to $56,520 ($59,520 in 2024). This means that you will lose $1 in benefits for every $3 you make over the limit. But once you hit full retirement age, there is no more limit on your earnings, so you will be able to continue working with full benefits.

However, it only makes sense to wait until you’re 70 to start receiving Social Security benefits if you expect to live until you’re at least 80. To wait that long, you’ll also need to have income or sufficient savings to live off of until you opt to start receiving benefits. If your health is poor or you don’t have the means to fund yourself, then 62 might be the right age for you to start taking benefits. Just be sure you budget for the reduced amount of benefits that you’ll receive.

Finding Your Break-Even Age

Luckily, there is a way to determine the exact right age for you to start Social Security benefits. Your break-even age occurs when the value of your highest possible benefit (achieved by waiting until age 70) exceeds the value of your lower benefit (taken in early retirement). This calculates the financial return you’ll receive by waiting. If you think you’ll live well beyond that age, it may be worth the wait.

Keep in mind that those who start collecting benefits later will collect less and forgo potential interest earnings. But if you die before you hit the break-even point, the reduced benefits won’t matter. It’s essentially a game of hedging your bets. You want to take benefits when you can, but not before you need to.

Bottom Line

When it comes to calculating the right age for starting to collect your Social Security benefits, there’s no one-size-fits-all answer. As a rule, it’s best to delay if you can. If you’re in good health and don’t need supplemental income, wait until age 70. But waiting gets a lot more complicated when you factor in your financial needs and health. Whatever you decide, be happy with it. You worked hard for your Social Security and, hopefully, made an informed decision about when to start taking it.

Tips for Ensuring a Comfortable Retirement

• If you want to build a retirement plan, a financial advisor can help you reach your retirement goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Save, save, save. To be able to put off taking Social Security benefits until you’re 70, you’ll need to have enough stashed away to live off of until then. Our retirement calculator can help you figure out how much you’ll need to save to retire comfortably.
• Start saving early, and take advantage of employer matches. With our 401(k) calculator, you can see how much your 401(k) will be worth when you reach retirement.
• Think hard about where you want to retire. Not all states are equally tax-friendly to retirees. Use our retirement tax-friendliness tool to see how tax-friendly your home state is, and whether Social Security benefits are taxable at the state level there.

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