As Americans continue to struggle with the rising cost of living, choosing the right time to apply for Social Security benefits has never been more important. Social Security retirement benefits are calculated based on how long you worked, how much you earned, and when you started collecting them.
Those who file for their benefits at the earliest retirement age, which is 62, get a reduced monthly payment, while those who wait until age 70 see a higher amount.
Data from the Social Security Administration (SSA) shows that the majority of people apply for benefits before reaching full retirement age (FRA), but experts indicate that this decision will depend on several factors such as the person’s health. , your financial situation and your marital status.
“There is no perfect age, it is very specific for each individual, couple and family,” said Martha Shedden, president and co-founder of the National Association of Registered Social Security Analysts.
When Can I Receive My Full Retirement Age (FRA) Benefit?
To receive 100% of the benefit to which you are entitled, you must wait until your full retirement age. That age varies depending on the year you were born.
For those born before 1954, the full retirement age is 66, and then gradually increases for people born between 1955 and 1960. Anyone born in 1960 or later can receive their full benefits at age 67.
How Much Social Security Will I Receive if I Apply Early?
You can start collecting Social Security benefits from age 62, but that comes at a price; those who apply before reaching full retirement age see their monthly benefits permanently reduced, depending on how early they apply for their retirement.
Let’s pretend that a person’s full retirement age is 67 years. You can start receiving benefits at age 62, which is 5 years earlier, but your monthly benefit would be decreased by approximately 30%. That means a profit of $1,000 would be reduced to $700.
Benefits for those who are in a relationship are also reduced when a person applies for Social Security early.
What Happens if I Delay Receiving My Social Security Benefits?
According to data from the Social Security Administration, the average retirement benefit per month for people aged 62 was $1,275 in the month of December 2022. If we make a comparison, retirees aged 67 obtained $1,844 per month on average, about $7,000 more per year.
You can use the Social Security Administration’s calculator to get a general idea of the monthly payments you may receive, based on your age and income.
Those who wait until after full retirement age to begin receiving benefits receive an increase based on how long they delay, the increase is called a delayed retirement credit and is equivalent to an 8% increase annually, which a person waits to apply for benefits between full retirement age and 70 years of age.
For example, if someone is eligible to fully retire at age 67, they will receive an 8% increase each year they wait to claim benefits, until they reach age 70. That means you can earn up to 124% of your full benefit if you delay claiming until age 70.
