Determining what age to begin claiming your Social Security benefit is a big decision. Do you claim early at age 62? Take it at your full retirement age? Delay until you’re 70 years old? Or any age in between?
There are a wide variety of factors that can go into your final decision, and we recommend that you consult with a qualified professional to discuss your options. Here are some things to consider as you start that conversation.
How do you determine your full retirement age?
For many years, full retirement age was simply set at 65. But as people began to live longer, Congress passed a law to gradually raise the retirement age to 67. The table below outlines this incremental increase.
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*If you were born on January 1, use the previous year to determine your full retirement age. Source: Social Security Administration, “Retirement Age Calculator,” https://www.ssa.gov/benefits/retirement/planner/ageincrease.html
The reality is that by 2027, the incremental increases will be complete. At that point, everyone who has not yet hit their full retirement age will reach it when they turn 67.
What happens if you claim your Social Security benefit early?
While most of us won’t reach full retirement age until 67, you do have the ability to claim Social Security benefits as early as age 62. Some potential reasons to consider this are if you’re claiming survivorship benefits for a spouse who has passed away, if you’re retiring in a turbulent market, or if you believe your life expectancy may be shorter.
But understand that if you draw from Social Security earlier than your full retirement age, your benefit will be reduced by a set percentage based on your birth year. The chart below outlines how much your benefit will be reduced if you begin receiving Social Security payments at age 62.
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*If you were born on January 1, use the previous year to determine your full retirement age. Source: Social Security Administration, “Starting Your Retirement Benefits Early,” https://www.ssa.gov/benefits/retirement/planner/agereduction.html
What happens if you wait to claim your Social Security benefit?
Once you reach full retirement, you can access the full benefit every month. However, just as you can claim early, you also have the option to delay your Social Security benefits. Your benefit will increase by a set percentage for every month you delay, until you reach the age of 70.
For anyone who has not already turned 70, the annual rate of increase is 8%. The monthly rate breaks down to 2/3 of 1%.1 These increases build over time, meaning a larger monthly benefit for every month you wait to start taking it. Delaying until age 70 would have you collecting 124% of your full retirement age benefit!
We’re Here to Help
Many factors should be considered as you develop a plan for when you want to start claiming Social Security, and you don’t need to work through it on your own. A trusted wealth manager can walk you through these considerations and more—discussing how they specifically relate to your situation—to help determine your plan. If you’re not already working with a financial advisor, reach out so we can help you get connected.
1. Social Security Administration, “Delayed Retirement Credits,” https://www.ssa.gov/benefits/retirement/planner/delayret.html
Michael Gruidel is a non-producing registered representative of Cetera Wealth Services LLC, Member FINRA/SIPC. Cetera is under separate ownership from any other named entity.
This content is for general information only and is not intended to provide specific legal, tax, or other professional advice.
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