The best way to ensure you get the most out of your Social Security retirement benefits is to wait until you’ve reached full retirement age (FRA) to apply for them. This will guarantee you get the full payment you are entitled to each month. The FRA used to be 65 years old, which is why so many people equate 65 with retirement. However, that is no longer the case.
Under current rules, the full retirement age is 66 if you were born from 1943 to 1954, according to the Social Security Administration. The FRA increases gradually if you were born from 1955 to 1960, until it reaches 67. For anyone born in 1960 or later, full retirement benefits are payable at age 67. You can find your full retirement age by birth year in the SSA’s full retirement age chart.
The question of whether you should wait until full retirement age to collect Social Security depends on many factors, ranging from the size of your retirement savings and your immediate financial needs to your life expectancy.
You can get Social Security retirement benefits as early as age 62, but your benefits will be reduced vs. what they would be if you waited until full retirement age. Based on an estimated monthly benefit of $1,000 at FRA, the SSA estimates that your payment would be reduced by anywhere from 25% to 30% by claiming benefits early.
On the flipside, you can wait as long as age 70 to begin collecting Social Security benefits. In this case, the amount of your retirement benefit will continue to rise until age 70, when it maxes out. There is no incentive to delay claiming after age 70.
As GOBankingRates previously reported, there might be plenty of good reasons to claim Social Security early. For example, if you suffer from a medical condition that might lead to an earlier-than-normal death, you’re better off collecting now when the money can be put to use by you and your loved ones.
Another reason you might want to collect early is if you have high-interest debt. Using the early benefits to reduce or eliminate that debt could mean you’ll be able to keep more of your benefits in the future.
On the other hand, if you are physically healthy and in a strong financial position, you’re usually better off waiting as long as you can to collect Social Security. This is especially true if you plan to keep working through most or all of your 60s. If you earn income while also collecting Social Security, you’ll have to sacrifice some of your benefits above a certain yearly income.
Another thing to keep in mind is that the full retirement age is not written in stone. It can (and already has) changed, and some lawmakers would like to see it raised again to help keep Social Security financially solvent.
A proposal released over the summer by the Republican Study Committee would realign the full retirement age to account for increases in life expectancy. Doing this means the FRA for Social Security would increase age 70.
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