The question of when to apply for Social Security benefits is tricky. Of course, the short answer is that you become eligible to start taking benefits when you turn 62, but there might be better times to tap into those benefits.
When To Apply For Social Security
Your age is one of the most critical factors in deciding when you should start taking benefits. However, be sure you know other vital points to consider before you claim Social Security.
For example, if you’re still working, doing an earnings test will help you understand how your payments can be lowered. You’ll need to plan for increased longevity if you come from a long-living family. You may even get a public pension and full social security benefits but remember to consider tax implications and how starting benefits might affect your spouse.
Full Retirement Age (FRA)
Age 62 marks only 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 until you reach your FRA, which differs depending on your birth year.
Here is a summary of when you will reach your FRA by birth year if you were born:
- In 1960 or later, 67 years.
- In 1959, 66 years and ten months.
- In 1957, 66 years and six months.
- In 1956, 66 years and four months.
- In 1955, 66 years and two months.
- Between 1943 and 1954, 66 years.
What Happens If You Start Claiming Social Security At Age 62?
Taking Social Security at age 62 will dramatically reduce the monthly payments you will receive, which is why many retirees wait a few years to collect benefits. Reduced monthly benefits are linked to the months left before your FRA, calculated from the day you turn 62.
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 to $700. And if you are married, your spouse’s monthly benefit would drop from $500 to $350. Your total family income from Social Security would be $450 less than if you had waited until your full retirement age.
The Social Security Administration’s (SSA) Full Retirement and Age 62 Benefit By Year Of Birth table gives a more detailed list of this effect. You can also use SSA’s Retirement Age Calculator, which calculates your full retirement age and generates a table showing the percentage decrease in benefits you and your spouse would receive for each month and year you retire before your FRA.
The SSA also has additional footnotes; for example, those born on January 1 should use the previous year’s numbers. Similarly, those born on the first of the month should use the last month’s numbers.
Additionally, you must be at least 62 for an entire month before receiving Social Security benefits.
Why It Makes Sense To Wait
Your monthly payments will increase if you start taking Social Security at age 70. This is one reason many seniors wait to claim benefits, especially if they’re in good health.
For example, those born in 1943 or later will see a 12-month 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, claiming benefits starting at age 65. Medicare eligibility is perhaps the biggest reason to begin taking benefits at age 65 because you gain access to health insurance.
If you retire before age 65, you may not have access to affordable health insurance without Medicare.
The Bottom Line
Deciding when to start taking benefits is a necessary and personal choice that depends on multiple factors, such as:
- The size of your nest egg
- Whether you’re still working
- Whether you’re in good health
- If you have a longer life expectancy
- Whether you still have health insurance
- Or if you are eligible for benefits on someone else’s record
Of course, the earlier you start taking Social Security, the longer you will receive monthly payments. However, your monthly payments are reduced if you start taking benefits earlier, so there is no one-size-fits-all solution for every senior.