“You should evaluate your physical health, your current financial picture, your genetics for longevity and how your retirement age will impact your monthly Social Security check when deciding the age at which to retire.”
It happens to all of us, if we are lucky. After working for decades, we think about retirement. As you run the numbers to see what your financial reality will be in your golden years, you may be wondering, When should you start collecting Social Security retirement benefits? Evaluate your physical health, your current financial picture, your genetics for longevity and how your retirement age will affect your monthly Social Security check when deciding the age at which to retire.
The Pros and Cons of Taking Early Retirement
The earliest you can retire and get a monthly Social Security check is age 62. The advantage of retiring early is that you get to quit working sooner. If you have severe health problems and do not expect to live for many more years, you may wish to have free time to enjoy your remaining years.
There are financial consequences of retiring early. You will get a smaller check every month for the rest of your life, than if you had waited until full retirement age to collect Social Security. Your full retirement age will depend on the year you were born. At your full retirement age, you can draw your full monthly Social Security benefit with no reduction.
If you were born in 1937, your full retirement age is 65. Every year later, the Social Security Administration (SSA) adds two months to the requirement for full retirement age. If you were born between 1943 and 1954, your full retirement age (FRA) is 66. For people born in 1960 or later, the FRA is 67.
For a person with a FRA of age 67, the monthly Social Security check reductions for early retirement are:
Your retirement age Reduction
Age 62 About 30%
Age 63 About 25%
Age 64 About 20%
Age 65 About 13.3%
Age 66 About 6.7%
Your monthly check will be less, if you elect to take spouse’s Social Security benefits early. Your check will be the amount your spouse would receive at FRA, but reduced by:
Your retirement age Reduction
Age 62 About 67.5%
Age 63 About 65%
Age 64 About 62.5%
Age 65 About 58.3%
Age 66 About 54.2%
Age 67 50% of your spouse’s check at FRA, which is the maximum benefit amount
Retiring at Full Retirement Age
You will receive your full Social Security check every month, with no reduction for early retirement, if you retire at your FRA. If your spouse also waited until FRA to collect spousal Social Security benefits, his or her check will be the full amount, which is 50% of your check.
If you are healthy and you have good genetics for longevity, retiring at FRA or later may be a good option for you. If your parents and other family members have lived to ripe old ages, you likely have good genetics for longevity. Also take a candid look at your lifestyle, and evaluate whether you have healthy or unhealthy habits that could affect how long you live.
Your finances are another factor to consider when thinking about when to retire. If you are unemployed and have no savings, you may not wait until FRA to collect Social Security.
Working Past Full Retirement Age
If you work beyond your FRA, you will get a higher monthly Social Security check, than if you had retired at your FRA. There are limits to this bonus. If your FRA is age 67, your monthly Social security check will be higher for every month you delay retirement until age 70. However, working beyond age 70 will not increase your monthly check.
Still sign up for Medicare at age 65, even if you delay your retirement. There are financial penalties if you do not sign up for Medicare on time.
Talk with an elder law attorney in your area for advice on planning your retirement.
AARP. “When Should I Start Social Security Benefits?” (accessed September 20, 2017) http://www.aarp.org/work/social-security/info-11-2013/when-to-start-social-security-benefits.html
Social Security Administration. “Retirement Planner: When To Start Your Benefits.” (accessed September 20, 2017) https://www.ssa.gov/planners/retire/applying1.html
CNN Money. “The best time to start taking Social Security.” (accessed September 20, 2017) http://money.cnn.com/2016/05/11/retirement/when-to-take-social-security/index.html
Social Security Administration. “Retirement Planner: Full Retirement Age.” (accessed September 21, 2017) https://www.ssa.gov/planners/retire/retirechart.html