If you have not yet retired, you will have an opportunity to decide when to begin collecting Social Security benefits. You may be eager to begin receiving checks as soon as possible, but you may be better off waiting under some circumstances.
How Your Age When You Begin Collecting Benefits Can Affect the Amount You Receive
Full retirement age is the age when you’re eligible to collect full Social Security benefits. If you were born in 1951 or later, your full retirement age is between 65 and 67, depending on your birth year.
You may begin collecting benefits up to 36 months before your full retirement age, but they will be permanently reduced by a fraction of 1 percent for each month you begin collecting benefits before reaching your full retirement age. That can add up to a significant reduction in benefits.
If you start collecting Social Security payments after you reach your full retirement age, you will receive a credit of 8 percent for each year that you delayed taking benefits. That can lead to substantially higher benefits for the rest of your life.
How to Decide When to Begin Collecting Benefits
If you will need Social Security payments to cover essential expenses, or if you are in poor health and don’t believe you will live past the average life expectancy, it may be best to start collecting your benefits early. If you begin collecting Social Security benefits early but you are still working, your benefits will be reduced until you reach your full retirement age.
If you think you will live long after you begin collecting benefits, it may be to your advantage to work longer, delay collecting benefits and get a larger monthly payment when you start receiving benefits. If you will have sufficient income from retirement accounts, a pension or other sources, you may be able to retire when you want, delay taking your Social Security benefits and still make ends meet.
If you’re married, consider both your and your spouse’s potential benefits and life expectancies. Survivor benefits for a spouse with a lower income will depend on the higher spouse’s benefits. If the higher-earning spouse delays taking benefits, that may help the surviving, lower-earning spouse later.
Your combined income is the sum of your adjusted gross income, non-taxable interest payments and half of your Social Security benefits. As your combined income increases, more of it becomes taxable. If you are still working, it may be to your advantage to put off collecting Social Security benefits.
Helpful Information From the Social Security Administration
You should receive an annual Social Security statement with information on your projected benefits at various ages to help you decide the best age for you to begin collecting benefits. The Social Security Administration has calculators that can help you figure out at what age you would break even based on your projected benefits at various ages and tax rates.