As U.S. citizens continue to struggle with the rising cost of living, choosing the right time to apply for Social Security benefits has never been more important and, at the same time, a delicate decision to make.
Social Security retirement benefits are calculated based on how long you worked, how much you earned, and when you started collecting them. Those who apply 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.
Americans Deciding Whether to Claim Benefits Earlier or Later
The data that the Social Security Administration (SSA) provides indicates that the vast majority of people make the application for benefits before reaching the full retirement age, but experts say that that decision will depend on various factors such as the person’s health, his financial situation and his marital status.
“There is no such thing as a perfect retirement age. It’s very specific to 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 Benefit?
To get 100% of the benefit you are entitled to, you have to wait until your full retirement age. That age will depend on the year you were born.
For people born before 1954, the full retirement age is 66, and then gradually increases for people who were 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 the Social Security benefit from the age of 62, but that comes at a price, those people who make the application before reaching the full retirement age see their monthly benefits permanently reduced depending on how soon they make their application for the retirement benefit.
Let’s pretend that the full retirement age of a person is 67 years. You can start receiving benefits at age 62, which is 5 years earlier, but your benefit per month will be trimmed down by about 30%. Which means that a profit of $1000 would be decreased to $700.
Benefits for those who are in a relationship are also reduced when a person makes the Social Security application earlier.
According to data from the Social Security Administration, the average monthly retirement benefit for people aged 62 was $1,275 in the month of December 2022. If we make a comparison, 67-year-old retirees earned $1,844 a month on average, about $7,000 more a 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.
What if I Delay Receiving My Social Security Benefits?
Those people who wait until after the full retirement age to start receiving benefits receive an increase based on the time they are delayed, the increase is called delayed retirement credit and is equivalent to an increase of 8% per year, which a person waits to make the application for benefits between full retirement age and 70 years.
That is, if there is a person who is eligible to retire completely at the age of 67, he will receive an increase of 8% every year he waits to apply for benefits, until he reaches the age of 70. That means you can earn up to 124% of your full benefit if you wait to apply until you turn 70.
