For many Americans, Social Security is a major part of retirement income. One of the most consequential decisions is when to begin collecting retirement benefits. Eligible workers can generally claim as early as age 62, but starting early permanently reduces the monthly retirement benefit compared with waiting until full retirement age. Delaying beyond full retirement age can increase it further, up to age 70.
The decision is not simply about getting money sooner or receiving a larger check later. It involves health, employment, household income, savings and the possibility of living many years in retirement.
What Full Retirement Age Means
Full retirement age is the point at which a person becomes eligible for their unreduced Social Security retirement benefit. It depends on the year of birth. For people born in 1960 or later, full retirement age is 67.
Claiming before that age results in a permanent reduction in the monthly benefit. Someone born in 1960 or later who claims at 62 can receive 30 percent less than their full retirement-age benefit. Waiting until full retirement age avoids that early-claiming reduction.
The Benefit of Waiting
People who delay claiming after full retirement age earn delayed retirement credits. For people born in 1943 or later, the increase is generally 8 percent for each full year of delay, up to age 70.
That can make a meaningful difference to monthly income. However, waiting means giving up payments that could have been received earlier. The financial outcome depends partly on how long the person lives and what other income is available while waiting.
Household Circumstances Matter
A person who is still working may have a different claiming decision from someone who has stopped working. Health conditions, a spouse's benefit, survivor benefits and household savings can also affect the choice.
Married couples should consider how each person's claiming age may affect the household's income over time. A higher earner's decision can have implications for the survivor benefit available to a spouse.
Do Not Confuse Social Security With Medicare
Delaying Social Security does not mean delaying every retirement-related decision. Most people should pay attention to Medicare enrollment around age 65, even if they plan to wait until 70 to claim Social Security. Delaying Medicare enrollment without qualifying coverage can lead to coverage gaps or penalties.
The Bottom Line
Claiming Social Security early provides income sooner but generally reduces the monthly benefit for life. Waiting can increase monthly payments, but requires other resources to cover the years before claiming. Reviewing an actual earnings record and comparing estimates at different ages can help workers make a decision based on their circumstances rather than a general rule.
This article is for informational and educational purposes only and should not be considered personalized financial, investment, retirement or tax advice.
