When to Take Social Security Benefits

Difficult decision as retirement nears

If you are approaching retirement, one of the key decisions you will face is when to begin receiving Social Security benefits. It is not an easy call, and the answer usually depends on your personal circumstances. Keeping that in mind, here is a brief summary of the rules provided by the Social Security Administration (SSA).

Essentially, there are three basic methods to consider: (1) early retirement, (2) normal or “full” retirement, or (3) late retirement. We have provided a brief description of each one.

1. Early retirement: You are eligible to begin receiving Social Security retiree benefits as early as age 62. However, you will receive a reduced benefit if you retire before the normal age for receiving full benefits. For example, if you retire at age 62, your benefit will be about 25% lower than what it would be if you wait until you reach your full retirement age.

2. Normal retirement: The age at which you can begin receiving full retirement benefits depends on when you were born. If you were born in 1948 or earlier, you are already eligible for full Social Security benefits. If you were born between 1943 and 1960, the age for receiving full retirement benefits gradually increases to age 67. For those born between 1943 and 1954—including many baby boomers—the “magic age” is 66.

3. Late retirement: You may choose to keep working beyond the age to receive full retirement benefits or delay your application for retirement benefits. Or you may not have a real choice if you need the income from your salary. In any event, consider the following points:

  • Each additional year you work adds another year of earnings to your Social Security record. Higher lifetime earnings may provide greater benefits to you in retirement.
  • Your benefit will increase automatically by a certain percentage from the time you reach your full retirement age until you start receiving your benefits or until you reach age 70. The percentage varies depending on your year of birth.
  • In addition, your decision may be complicated if you expect to claim benefits based on your spouse’s earning record. Typically, a spouse who has not worked—or one who has had low earnings—may receive up to one-half of the other spouse’s full benefit. If you are eligible to receive both your own retirement benefits and spousal benefits, your own benefits are paid out first. However, if your benefits as a spouse would exceed your own retirement benefits, you may receive a combination of benefits equaling the higher benefit.

Once you have reached your full retirement age, you may choose to receive only your spouse’s benefits. In that case, you will continue accruing delayed retirement credits on your own Social Security record. Then you may file for benefits at a later date, up to age 70, and receive a higher monthly benefit based on the delayed retirement credits.

Last, but not least: Other special rules may apply for widows and widowers, divorced spouses, and those entitled to receive disability benefits. You can find more information on these topics by visiting the SSA Web site at www.ssa.gov. Finally, do not hesitate to consult your professional advisers before you make a determination as to when to begin benefits.

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