When To Take Social Security

The age of 62 is quickly approaching.  The important decision of when to take your social security is haunting you.  Do you take it now or wait?  Before you decide, let’s first understand what social security is really about.

Social Security Comes In Three Flavors

When it comes to Social Security, you’ve got three alternatives: Take it early, wait until your normal retirement age or wait even longer. The normal age for receiving Social Security retirement benefits is a moving target (see table below). You can still elect to take benefits early at age 62, or wait as late as age 70. Given the range of choices, as your 62nd birthday approaches, you’ll likely be thinking about more than just how all those candles are going to fit on the cake.

Before you consider whether it makes sense to take Social Security benefits earlier or later, let’s take a look at some of the rules.

Do You Know What Your “Normal Retirement Age” Is?

Normal retirement age (abbreviated as NRA, but sometimes called full retirement age) is when you’re eligible to receive full Social Security benefits. The normal retirement age used to be 65 for everyone. However, under current law, 2002 was the last year anyone age 65 could receive full benefits. If you were born in 1938 or later, your normal retirement age is some point after age 65—all the way up to age 67 for those born after 1959.

Your Social Security Benefit

If you were born in … Your “normal” retirement age is …
1937 or earlier 65
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
1943-1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 or later 67

Don’t Start Too Early

If you choose to start receiving your Social Security check before your normal retirement age, your benefit is reduced by five-ninths of 1% for each month before that age, up to 36 months. If you start more than 36 months before your normal retirement age, the benefit is further reduced by five-twelfths of 1% per month.

For example, if your normal retirement age is 66 and you elect to start benefits at age 62, there are 48 months of reduced benefits. The reduction for the first 36 months is five-ninths of 36%, or 20%. The reduction for the remaining 12 months is five-twelfths of 12%, or 5%. So, in this example, the total benefit reduction is 25%.

… and you’ll get credit for delaying

If you delay retirement until after your normal retirement age (prior to age 70), you typically get a credit. For example, say you were born in 1944. Your normal retirement age is 66 but you intend to take your benefits at age 68. By waiting the extra two years, you get a credit of 8% per year, which means your benefit is 16% higher than the amount you would have received at age 66.

If waiting seems hard to do, you’re not alone. Even though most people would probably be better off delaying benefits, 76% of women and 71% of men took early Social Security

Next time we’ll look at factors to consider when deciding to take your Social Security benefits.

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