When should I start collecting Social Security? It’s a question that many aging Americans ask, but the truth is that there’s no one right answer. Even the Social Security Administration can’t name the one "best" age to start drawing benefits.
Determining the right age to collect Social Security is a personal decision, and a variety of factors are in play. American workers should consider all the angles before pulling the trigger.
Social Security Age Guidelines
Currently, 62 is the minimum age at which an eligible worker can start receiving Social Security benefits. However, anyone who starts collecting at this age will receive only partial benefits. Many people opt to wait to collect until they reach full retirement age. That’s the age at which a person is eligible to collect his or her full benefits.
A worker’s full retirement age depends on the year of his or her birth. The full retirement age is 66 for workers born between 1943 and 1954. The more recently a person was born, the higher his or her full retirement age. (For example: for someone born in 1960, it’s 67.)
Once a person reaches his full retirement age, he can collect 100 percent of his benefits each month for the rest of his life. Workers who take Social Security early receive reduced benefits for the rest of their lives. For example, if a person’s full retirement age is 67 but he retires at 62, he’ll only get 70 percent of his full benefits each month. If he waits until 63, he’ll get 75 percent benefits.
A worker can receive more than 100 percent benefits if she waits until past her full retirement age to start collecting. Currently, monthly benefit amounts increase up to age 70. Someone with a full retirement age of 66 who waits until age 70 to take Social Security will receive 132 percent of her full retirement benefit.
Other Factors to Consider
From a strictly financial position, 70 is the best age to take Social Security – on paper, at least. But that’s not feasible for many workers, for a few reasons.
Workers with serious health issues who don’t have many years left to live may opt to collect Social Security early as a way to fund their remaining years. Although their monthly checks will be lower than they could be, the people who make this choice aren’t necessarily worried about running out of money in the long run and are instead focusing on the short term.
Those people with pressing financial crises may also take early Social Security as a stopgap measure to keep their homes or deal with other financial burdens.
Marital status is another factor. If two spouses are both eligible for Social Security benefits, one person might start collecting benefits early in order to cover household expenses while the other waits until full retirement age or later. The lower-earning spouse may not collect his or her own benefits at all, instead opting to collect spousal benefits – that is, 50 percent of the higher-earning spouse’s monthly benefits (or less than 50 percent if the higher-earning spouse takes benefits early).
How to Choose
It’s impossible to predict the future, so workers have to do some guessing when deciding on the "right" age to collect Social Security.
Looking at actuarial tables and consulting with one’s doctor are simple ways for a worker to estimate his life expectancy, which should help him clarify how much money he’ll need to support him through the end of his life. Talking to a financial planner is useful too. Ultimately, the safest bet is to put off collecting Social Security until age 70 or as close to it as possible.
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