Updated : Sep 10, 2019 in Articles

When Can I Retire and Collect Social Security? What’s The Best Age?


Dan Kline: Hi, there! I’m Motley Fool contributor
Dan Kline, and on this episode of FAQ, we’re looking at when you should take Social Security.
Before we get into when you should claim, let’s look at when you can claim. You can
begin claiming at 62, but to get your complete Social Security benefit, you need to wait
until your full retirement age. That’s 66 for people born between 1943 and 1954. For
anyone born between 1955 and 1959, you’ll have to wait a few more months. For anyone
born after 1960, full retirement age has been raised to 67. To further
complicate things, you don’t have to retire when you hit full retirement age,
and it actually pays not to. If you can wait at least one extra year after 66 or 67,
depending on which one is your full retirement age, you’ll get an extra 8% in benefits for every
year between 66 — or 67, depending upon your age — that you wait to submit
your claim, until the age of 70. In addition to those calculations,
there’s also different considerations for a married person who did not work long enough or make
enough money to earn much of a Social Security check. People in that category can retire
at full retirement age with half of their spouse’s benefit. If, however, they choose
to retire at 62, then that amount can get reduced by up to 35% — 8.33% for each of
the first three years, and 5% for each year on top of that. It’s worth noting that the
spouse does not get a lesser benefit of his or her own when this claiming method is used;
and should the higher-earning spouse die, the surviving member of the couple can switch
from the half share to a survivor’s benefit, which is generally the full
amount the spouse was collecting. That, of course, only covers when you could
start collecting Social Security, not when you should. To decide when you should take
benefits, you should consider the following things. One, how long can you continue working?
Two, how much do you have saved? Three, what will your expenses be in retirement it?
Four, are you in good health? Deciding when to collect Social Security requires taking an honest
look at your finances, your savings, your work situation, and your post-retirement
expenses. The earlier you file, the less you get; but it is a sliding scale. You lose 6.67% a year
for the first three years if you retire between 62 and 65. For the year — or two years —
after that, depending upon whether full retirement age is 66 or 67 for you, you’ll lose 5% for
each year you claim your benefits early, with a maximum loss of 30%.
Simply put, you collect more money each month if you can put off retirement until 70, but
that may not be the right move for everyone. If, for example, you’ve saved enough that
Social Security won’t be an important part of your retirement income, but you’re not
in great health, you may consider claiming at 62 to maximize the amount of years
you collect. That scenario, sadly, does not apply to most Americans. In fact, a recent survey
from Transamerica showed that 66% of American seniors expected Social Security to be their
principal form of retirement income. That’s a scary number since Social Security generally
only replaces about 40% of an individual’s pre-retirement income.
For most Americans, unless you have saved well for retirement, or are in poor health,
it makes sense to delay taking benefits for as long as possible. If you keep working until
full retirement age, you will have put in four or five extra years where you’re earning
money and not spending any of your retirement savings. If you can keep working until 70,
you will increase your Social Security payment by 24% to 32%, depending on your full
retirement age, and that’s a pretty huge difference. Of course, if you can’t work anymore, or have
stopped working because you’ve planned properly for retirement, then it may make sense to
claim earlier. The same is true if your health prognosis suggests you don’t have
that many years ahead of you. When to claim Social Security is a very personal
question, but the broad answer for the average American with no major health problems is
to put it off as long as possible. If you wait, you can maximize how big your monthly
check will be. And hopefully, you’ll live long enough to collect more than you would
have, had you taken a smaller check sooner. Thanks for watching this video! We’ve got
more like it in the works. To catch them, hit the subscribe button. And if you like
what you saw, give us a thumbs up. If you have questions you want us to tackle, drop it in the
comments section below, and we’ll add it to our list.

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