A key decision that will affect the rest of your retirement is deciding when to begin taking your Social Security benefits. You have three options:
- Begin taking benefits between age 62 and your full retirement age;
- Wait until your full retirement age; or
- Delay benefits and take them anytime up until you reach age 70.
The largest benefit is by waiting until age 70. However, most people don’t wait that long. Some need the money right away, or they have uncertain health. But if you can wait you’ll increase your monthly check for the rest of your lifetime if you delay benefits, even past full retirement age. Your decision will depend on whether you plan to keep working, your health and life expectancy, your spouse’s Social Security, and any other pension or retirement funds available to you.
Full retirement age is a moving target. Previously fixed at age 65, now full retirement age depends on when you were born. If you were born before 1937, your full retirement age was 65. For those born after 1937, the full retirement age gradually increases until it reaches age 67 for people born in 1960 or later.
If you take Social Security between age 62 and your full retirement age, your benefits will be reduced to account for the longer period you will be paid. For example, if you retire at age 62 your benefit will be about 25% lower than what you would have received if you’d waited until full retirement age.
If you wait until after your full retirement age to start Social Security, then depending on when you were born, your benefit will increase by 6 to 8 percent for every year that you delay. If you were born in 1943 or later, the increase is 8 percent per year for each year that you delay signing up for Social Security beyond your full retirement age. Your Social Security will also be increased by the annual cost of living increases.
Note: Regardless of your decision about Social Security, be sure to sign up for Medicare at age 65. If you don’t, your Medicare premiums could increase if you delay.
You can get estimates of your Social Security benefits and other information, at the www.ssa.gov website.