How Social Security Benefits Are Impacted at Every Age From 62 to 70
There’s a lot of discussion in the financial world about when is the best time to claim Social Security retirement benefits, and rightly so. The age at which you claim is one of the two main factors determining exactly how large your benefit will be, along with your earnings record. Although you can claim your benefits at age 67, which is full retirement age for those born in 1960 or later, you also have the option to file as early as age 62 or wait as late as age 70. The amount you receive will be different at every single one of those ages in between.
But how exactly are Social Security benefits impacted at every age from 62 to 70? Here’s a black-and-white look at the changes.
What Is Full Retirement Age Anyway?
Full retirement age isn’t some mandatory age at which you must retire or claim Social Security benefits. Rather, it’s the age at which you will receive your full retirement benefit, as calculated by the Social Security Administration. From 1943 to 1954, full retirement age was 66, but as the American population has aged, the SSA has steadily increased it to its current level of 67 for those born in 1960 or later. For those born between 1955 and 1960, full retirement age was increased by two months per year, to 66 years and 2 months for those born in 1955, 66 years and 4 months for those born in 1956 and so on.
How Much Are Benefits Reduced by Claiming Early?
Social Security retirement benefits are reduced by 5/9 of 1% for each month you file before full retirement age. However, that reduction only applies to those claiming within 36 months of full retirement age. If you file even earlier, your benefit is reduced by an additional 5/12 of 1% for each month, meaning your benefit is reduced rapidly. If your benefit at full retirement age (67) is $1,000, for example, filing at age 62 will reduce it by 30%, to just $700.
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How Much Do Benefits Increase for Delayed Filing?
For those with a full retirement age of 67, each year that you delay filing, up to age 70, results in an 8% increase to your monthly benefit. This translates to a 24% boost in your earnings if you can wait to file until age 70.
Imagine a scenario in which your full retirement age is 67 and your standard benefit is $1,000. Here is how much you would receive if you claimed your benefit at each age from 62 to 70.
Age 62 is the earliest that you can file for Social Security, and therefore it results in the smallest benefit. Your full retirement age benefit will be reduced by 30%, from $1,000 to $700.
As you’re claiming benefits more than 36 months before full retirement age if you file at age 63, your benefit will be reduced by an accelerated amount. You’ll only receive 75% of your standard benefit at age 63, or $750 per month.
At age 64, you’ll receive 80% of your standard Social Security benefit, or $800 in this example.
Although age 65 used to be thought of as the standard retirement age, those days are long gone. If you file now, you’ll still be two years away from your full Social Security retirement benefit. Your monthly check will be $866.67 instead of $1,000.
Age 66 marks the smallest reduction in benefits, as you’ll be filing one year early. At a reduction of 5/9 of one percent per month, this makes your monthly benefit $933.33.
For those born in 1960 or later, which is most retirees filing for Social Security these days, age 67 marks full retirement age. You’ll receive your standard benefit at this age, neither increased nor reduced. This means your benefit at this age will be a flat $1,000 per month.
If you can wait even one year to claim your Social Security retirement benefit, you’ll see your monthly check jump by 8%. That’s a very good return on what’s essentially a no-risk investment. Your standard $1,000 monthly benefit would instead be $1,080, and that increase would remain in place for the rest of your days.
At age 69, you’re approaching your maximum Social Security retirement benefit. Your monthly check will be $1,160 instead of $1,000, representing a 16% increase over your standard retirement payout.
Age 70 is the last age at which you can file for increased Social Security benefits. At 8% per year, your benefit jumps by 24% over your full retirement age, to $1,240. This is a whopping 77% over the amount you would receive if you filed at age 62 instead.
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