When to Claim Social Security Benefits

Should you claim social security benefits at early retirement age, full retirement age, or later? Learn the pros and cons of each option.

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Deciding the age at which you'd like to claim Social Security retirement benefits is tricky: Should you go for the lower-dollar option at age 62 or wait until full retirement age and get bigger monthly checks for the years that remain? It's important to learn about your different options and benefit amounts before you start receiving Social Security benefits to make the most of your retirement money.

Here's how to determine what your Social Security retirement benefits will be at different ages, and whether you should take early retirement benefits or not.

Your Social Security Retirement Options: Early, Full, and Late Retirement

You may opt to receive benefits early (at age 62), at full retirement age, or after full retirement age. Your full retirement age varies between 66 and 67 depending on when you were born. (To determine your full retirement age, visit the Social Security Administration's website and use the Retirement Age Calculator.)

If you claim benefits before full retirement age. Almost 40% of retirees claim benefits as soon as they turn 62 (referred to as "early retirement"). If you claim early retirement, you'll receive up to 25% less than you would have if you'd waited until full retirement age (this number goes up to 30% in 2022 for people born in 1960 or later).

If you claim benefits at full retirement age. Although claiming at full retirement age entitles you to "full" retirement benefits, you're actually given an incentive to wait even longer, as described next.

If you claim benefits after full retirement age. From your full retirement age until you reach age 70, the Social Security Administration (SSA) will increase your benefits by 8% per year.

Let's see how this plays out. Imagine that you'd receive $21,180 annually if you retired at your full retirement age (let's say it's 66). If you retired early, at age 62, you'd receive only about $15,885 in Social Security annually from retirement until the end of your life. If you waited to retire until age 70, you'd receive about $28,000 annually, an 87% increase in monthly payments over claiming them at age 62.

Curious about the grand totals? If you lived to be 75, you would receive a total of $206,505 if you started at age 62; $190,620 if you started at full retirement age; and $140,000 if you started at age 70. But if you lived to be 85, you would receive a total of $365,355 if you started at age 62; $402,420 if you started at full retirement age; and $420,000 if you started at age 70. (These annual amounts will vary based on cost-of-living increases built into the payment system.)

Calculating Your Retirement Benefits for Each Option

To find out how much your benefits will increase or decrease depending on the age you retire, go to Social Security's Early or Late Retirement Calculator. The SSA also offers online calculators to help you estimate your retirement benefits at each age. You can also see a personalized comparison of retirement benefits at age 62, at full retirement age, and at age 70 on your Social Security Statement. Go to www.ssa.gov/mystatement to view your statement. Social Security sends out printed statements every five years to those not receiving benefits, and every year to those over 60.

Determining Which Retirement Age is Best for You

Should you take the money and run at age 62? Or hold out until you're 70? Approximately 50% of people don't wait past age 62, usually because they need the money, are convinced that Social Security might collapse at a later date, or are fearful of a short life span.

But is early retirement a good option for you? The questions below will help you decide.

Are you still working? Some people, especially construction workers and other physical laborers, are less physically able to handle work at 62, even though they don't qualify for disability. They may be good candidates for early retirement. However, if you're still able-bodied and interested in working, you might want to avoid claiming early retirement benefits. If you're earning a high salary, you'll miss the opportunity to boost your Social Security payment amount. (Your monthly payments are fixed based on the average of your top 35 earning years. But once you elect to receive benefits, you can't continue to increase your average based on later Social Security contributions.)

Second, you'll lose one dollar in benefits for every two dollars you earn over the SSA's earnings limit ($18,960 in 2021). There are no such deductions if you work after reaching full retirement age. The SSA provides an online earnings test calculator to determine whether working will lower your retirement benefits.

How's your health? If you're convinced—either by genetics, research, or the amount of time you spend in doctors' offices—that you'll have a shorter lifespan than your peers, it doesn't make much sense to delay your retirement benefits.

What's your break-even point? If you had a good idea of when you were to die, you could compare your total benefit payments under all three common scenarios—age 62, full retirement age, and age 70. Financial planners prefer to calculate your break-even point—that's the age at which two of your total lifetime benefit amounts become equal to each other.

If you believe you'll live past this age (referred to as the "break-even" age), you should delay claiming benefits until the later of the two dates, in order to give yourself an overall higher total. Your personal break-even point will depend on a combination of factors, including your earnings record and when you were born. To get specific information about your personal break-even point, you can call Social Security at 800-772-1213 and ask them to do the calculations for you.

(Social Security states that if you live until your average life expectancy, your total lifetime benefit should be roughly the same whether you choose to retire at age 62, 66, or 70.)

Are you married? If one spouse has contributed far less to Social Security than the other, the greater-contributing spouse should ideally wait longer to claim benefits—at least until full retirement age. Then if the higher-earning spouse dies first, the survivor can claim the spouse's full benefit.

For many couples, it pays for the wife to start collecting at 62 and for the husband to wait. This is because husbands are likely to die first; when that happens, the widow can collect survivors benefits based on his, typically higher, benefits. It's all probability, of course, and changing right along with other societal changes. Read more at Nolo's article on how spouses can maximize their retirement benefits.

What will you do with the money? Claiming early benefits makes sense if you need the money for necessities—though that's also a sign that you're not saving enough, and should, if you're physically able, continue working longer. But claiming early benefits simply to augment an already-comfortable annual income doesn't make much sense. If you planned to invest the money, your investments would need to earn more than 7% annually to equal what you'd make by delaying benefits until full retirement age.

Do you have dependents? Your family's survivors benefits will be reduced if you claim early retirement benefits. However, your family's spousal or dependent benefits won't be decreased if you claim early retirement benefits.

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