Your benefit amount varies depending on when you apply for benefits. The earliest you can claim is at 62; the latest you can claim is 70. If you claim prior to reaching your full retirement age, the Social Security Administration (SSA) reduces your benefit amount by a percentage for each month prior to your full retirement age.
For example, if you were born in 1960 and retire at 62 (2022), you’d get 70% of your monthly benefits. If you retire at 65 (still before your full retirement age), you’d receive 86.7% of your monthly benefit.
Full retirement age varies. The full retirement age is 66 years and 2 months for those born in 1955. The age gradually increases to 67 for people born in 1960 and later. If you take benefits prior to your full retirement age, your benefits will be permanently reduced.
The full retirement age is when you’ll will be able to receive your full benefits, 100% of your calculated benefits.
If your circumstances allow you to delay collecting your Social Security beyond your full retirement age, your benefits will increase by 8% per year. If you wait until you’re 70 to collect benefits you’ll receive 24% higher payments.
The bottom line is whether you choose to collect your benefits early or delay your benefits there’s advantages and disadvantages to both strategies.
Dechtman Wealth Management can provide you with a comprehensive Social Security analysis that illustrates your expected income stream under different claiming scenarios.
In our next episode, you’ll learn about being able to work and collect social security benefits at the same time.