Deciding when to start receiving Social Security retirement benefits is one of the most important financial decisions you will make in your lifetime. The age at which you start receiving benefits will impact the amount you receive each month for the rest of your life. With Social Security playing such a critical role in retirement income, it is essential to determine the optimal age to file for benefits based on your unique situation.
How Social Security Retirement Benefits Work
Before exploring the best age to take Social Security, it is helpful to understand how Social Security retirement benefits are calculated. Your Social Security benefit amount is based on your average monthly earnings over your 35 highest paid years in the workforce. Your earnings are adjusted for inflation, and the Social Security Administration (SSA) calculates your average monthly indexed earnings during your top 35 years. This figure is plugged into a formula to determine your primary insurance amount (PIA) – the amount you would receive if you start taking benefits at your full retirement age.
In 2022, the full retirement age is 67 for those born in 1960 or later. You can start claiming as early as age 62, but your benefit amount will be permanently reduced by up to 30% compared to if you waited until full retirement age. On the other hand, you can delay benefits beyond full retirement age up to age 70, earning delayed retirement credits that boost your benefit amount by 8% per year beyond your full retirement age.
Factors to Consider When Deciding When to Take Social Security
There are several key factors to take into account when determining the optimal age to begin taking Social Security retirement benefits:
- Health and life expectancy – If you have reason to believe you may have a shorter-than-average life expectancy, taking benefits sooner may make sense to maximize your lifetime benefits. Those in good health with longevity in their families may want to delay benefits to earn those higher payments.
- Employment – If you plan to work in retirement, your income may impact the amount of Social Security retirement benefits you can receive if you start taking benefits before your full retirement age. In 2022, $1 in benefits will be deducted for every $2 you earn above $19,560 if you are below full retirement age. If you plan to keep working, delaying benefits beyond full retirement age means you avoid this earnings test.
- Marital status – Married couples need to plan together, as the decisions each spouse makes about when to claim impact both benefit amounts. Strategies like “file and suspend” allow one spouse to file for benefits while the other continues accruing delayed retirement credits.
- Other retirement income – The higher your income from sources like pensions and personal savings, the less reliance you’ll have on Social Security benefits to cover expenses. This gives you more flexibility on when to claim benefits.
- Break-even analysis – Comparing cumulative lifetime benefits based on different starting ages can help determine your breakeven point – when the higher monthly benefit from delaying exceeds the amount you would have received by starting benefits earlier.
When Should You Start Receiving Social Security Benefits?
Now that we’ve covered some of the key factors surrounding when to take Social Security, let’s dive into some more specifics on the best ages to claim benefits.
Age 62
Age 62 is the earliest possible age you can start receiving Social Security retirement benefits. For those born in 1960 or later, filing at 62 permanently reduces your monthly benefit amount by up to 30 percent compared to if you waited until full retirement age. However, you receive benefits for a longer period of time. For those with shortened life expectancies, filing at 62 maximizes lifetime benefits.
Claiming at 62 can also help bridge an income gap. If you retire early or lose your job in your early 60s, Social Security benefits can provide much-needed income before other retirement accounts can be tapped. For many without significant retirement savings, claiming at 62 may be the only realistic option to cover necessary living expenses.
Full Retirement Age
For most retirees today, full retirement age is 66 or 67 depending on your birth year. Filing for benefits at your full retirement age means you receive 100% of your primary insurance amount calculated by the SSA. There is no reward for delaying past full retirement age, but also no monthly reduction. Many Americans choose to file at full retirement age to receive an adequate monthly payment without permanently decreasing their benefit amount.
Full retirement age is also important for those working in retirement. Once you reach full retirement age, the earnings test goes away and you can earn any amount without impacting your Social Security benefits. For those who plan to work after initiating Social Security, waiting until at least full retirement age prevents benefit reductions.
Age 70
While you can technically claim Social Security benefits at any point between ages 62 and 70, age 70 is considered the latest age to optimize benefits. Delaying benefits past your full retirement age increases payments by 8% per year until age 70. So waiting from age 67 to 70 earns a 24% boost. For those who don’t need the income, delaying until age 70 to maximize monthly income can pay off.
However, breakeven analysis is important when weighing whether to delay benefits. For those who live into their late 70s and beyond, the higher payments from delaying benefits can make up for the missed payments earlier. But for those with lower life expectancies, claiming earlier often results in higher lifetime benefits despite the reduced monthly payments.
Main Factors in Deciding When to Take Social Security
While there are advantages and disadvantages to taking Social Security at different ages, general guidelines center around the following primary factors:
- Life expectancy – Shorter life expectancy favors earlier claiming, while longer favors delaying
- Income needs – Higher income needs support claiming at 62 or full retirement age, lower needs support delaying
- Work plans – Continuing to work past 62 supports delaying benefits until at least full retirement age
- Marital status – Married couples can coordinate filing strategies to optimize household benefits
- Health status – Poor health may dictate earlier claiming to receive benefits while still able to enjoy them
- Breakeven analysis – Weigh cumulative lifetime benefits from different starting ages based on your situation
Social Security Claiming Age Recommendations Based on Situation
Here are some recommendations on when to claim Social Security based on your unique circumstances:
| Situation | Recommended Claiming Age |
|---|---|
| Poor health/low life expectancy | Age 62 |
| Stopped working early, need income | Age 62 |
| Moderate health, average life expectancy | Full retirement age |
| Still working, high earnings | Full retirement age or later |
| Excellent health, family longevity | Age 70 |
| Substantial retirement savings | Age 70 |
| Married, want to coordinate benefits | Varies based on joint strategy |
Factors That May Influence Your Claiming Decision
Beyond your current health and financial situation, there are some additional factors that may sway when you ultimately decide to claim Social Security benefits:
Policy Changes
Social Security is facing a long-term funding shortfall. While retirement benefits are expected to be paid in full on time through 2035, changes will be needed beyond that point to maintain solvency. Potential policy reforms include raising the full retirement age, increasing payroll taxes, reducing COLAs, or means testing benefits. Fear of future cuts could lead some to claim benefits earlier while current rules remain in place.
Investment Performance
If you have substantial retirement savings, investment performance becomes a consideration. Strong market returns early in retirement may allow you to delay Social Security and maximize benefits. However, a sustained market decline could impact your overall retirement income sufficiency and lead you to claim Social Security sooner than originally planned.
Changing Life Circumstances
Evolving health conditions, family situations, employment opportunities, or living costs could alter your optimal claiming age. It is wise to reevaluate your Social Security filing strategy periodically during retirement rather than sticking to a predetermined age. Life changes may dictate adjusting when you start benefits.
Working Longer
Many Americans are extending their working lives, either by choice or necessity. Remaining employed longer provides more opportunity to delay Social Security and increase future payments. Even if you claimed benefits early for income, you can voluntarily suspend your benefits to earn delayed retirement credits once reaching full retirement age.
Conclusion
Deciding when to start receiving Social Security benefits has a lifelong impact, and there is no one-size-fits-all answer. The best claiming age for you depends on your current and projected financial situation, health outlook, marital status, retirement lifestyle, and other sources of income. While guidelines based on life expectancy, income needs, and work status can provide a starting point, your optimal age is ultimately based on your unique circumstances and preferences during retirement.