The oft-asked question is that at which age on the full age retirement chart should one begin collecting his/her Social Security benefits? The answer lies in what one’s “full” or “normal” retirement age is. Earlier, one could begin collecting benefits, although reduced, at age 62 or one could wait until they were 65. Now, full retirement is according to the year one is born in and that makes the age anywhere between 65 and 67 years. If you wait it out, you end up getting a higher monthly check. If you take reduced benefits now, then you could offset reductions in many ways. How does one decide? Here’s the aspects that one needs to consider:
Putting it off
Taking on benefits early can cost individuals. For instance, if one’s full retirement age (FRA) is 67, then their reduced benefits are:
– 6.7% if begun at 66,
– 13.3% if begun at 65,
– 20% if begun at 64,
– 25% if begun at 63, and
– 30% if begun at 62.
Generally, the better thing is to postpone taking the benefits for as long as it is possible for one. One advantage is that delaying benefits keeps the monthly sums as large as possible and helps boost future income. For instance, if one’s FRA is 66 and he delays taking benefits until he’s 67, he’ll get 108% of his monthly benefit. The same will jump to 132% if he waits until 70! A second advantage of delaying benefits is applying for Medicare at 65 years of age.
Early benefits could pay off too. Since no one can predict how long one will live, and if one is facing a problem where there is shortage of income and reduction in life expectancy, then taking Social Security benefits earlier can benefit. Only, one should budget for it. Another point to note is that it makes sense for married women to take early benefits, because they will outlive their husbands in all likelihood, but only if husbands don’t take their benefits early.
Calculating your break-even
The break-even age is when the total value of the postponed higher benefits exceeds the total value of early lower benefits. However, one should understand that there is no one right age that suits everyone. One should consider their post-retirement plans and health and financial needs when it comes to calculating a start date for Social Security benefits.