What is the best age to take Social Security? Is it 62 when you are first eligible? 65? 66? 70?
The truth is many people are unsure and often misinformed. A 2017 survey by The Nationwide Institute found that 91 percent of people didn’t know what factors determine the maximum payout they can receive for Social Security—this lack of awareness can cost you a lot of money if you file for benefits at the wrong time. Today almost two-thirds of retirees rely on their monthly check for at least half of their income, and for about for a third, it represents 90 percent or more.
Social Security payouts vary per person depending on your income over your working career (indexed over the 35 years you made the most) and the age at which you opt in for benefits. You can begin to take benefits at age 62 but this may not be the best idea if you are seeking maximum payouts. There are several ages to consider beginning Social Security between 62 and 70 and knowing the best time could make a significant difference in your monthly payout.
Taking benefits at 62
Age 62 is the earliest age you can begin receiving Social Security benefits but it is not the best way to maximize your payouts. If you start your retirement benefits at age 62, your monthly benefit amount is reduced by about 30 percent.
Which means if you were entitled to $2500/month in benefits at your “full retirement age” you would only receive $1,750 /month for accessing payouts too early. Despite this loss of payout up to 45% of Americans take Social Security as soon as they are eligible at age 62.
Taking benefits at 66
One common Social Security misconception is that full retirement age is 65 years old. ‘Full retirement’ age is the age when a recipient can receive full benefits from Social Security.
If you start at full retirement age, now between 66 and 67 years old, depending on the year you were born, you'll get your 100% of your full payment, based on your highest 35 years of earnings.
100% of your payment per month is sufficient, but if you can hold out on retiring longer, you stand to claim even high social security benefits.
Taking benefits at 70
If you wait until you are 70 years old to take your Social Security benefit, you will receive monthly payments that are 32 percent higher than the benefits you would have received at 66
Some people are aware of this, but only 2 percent of men and 4 percent of women wait until 70, according to a Center for Retirement Research at Boston College analysis of Social Security Administration data.
Overall many people take their Social Security benefits far too early and lose out on higher payments over their retirement years. There may be certain circumstances which force an earlier retirement but in order to maximize your benefits and take advantage of the money you worked hard for your entire career, you should target to retire after your ‘full retirement age’ (at least 66) and aim for 70 if you are healthy and able to continue your work. Maximizing your social security income in addition to other retirement investments will set you up for comfortable golden years.
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