What Is the Earliest I Can Collect Social Security
Key takeaways
- If you claim Social Security at age 62, rather than wait until your total retirement age (FRA), yous tin can expect upwardly to a xxx% reduction in monthly benefits.
- For every twelvemonth you delay claiming Social Security past your FRA up to age 70, you become an 8% increment in your benefit. So, if you can beget it, waiting could exist the better pick.
- Health status, longevity, and retirement lifestyle are 3 variables that can play a role in your decision when to claim your Social Security benefits.
When it comes to Social Security, it can exist tempting to have the money and run as soon equally y'all're eligible—typically at historic period 62. Afterward all, you've likely been paying into the system for all of your working life, and you're set to receive your benefits. Plus, guaranteed monthly income is nice to have.
Health status, longevity, and retirement lifestyle are 3 fundamental factors that can play a office in your decision when to merits your Social Security benefits. Yous may not be able to predict your future health condition, given the uncertainties that many people are dealing with during the COVID pandemic, just you lot can rely on the simple fact that if you lot merits early versus later, you will likely have lower benefits from Social Security to help fund your retirement over the adjacent xx-30+ years.
If you outset taking Social Security at age 62, rather than waiting until your full retirement age (FRA), you can expect up to a xxx% reduction in monthly benefits with bottom reductions equally you approach FRA. Remember, FRA is no longer historic period 65: Information technology at present ranges from 66 to 67, depending on your date of birth (see your full retirement age). And your almanac cost-of-living adjustment (COLA) is based on your benefit. Then if you begin challenge Social Security at 62 and beginning with reduced benefits, your COLA-adjusted benefit will exist lower likewise.
Waiting to merits your Social Security benefit volition result in a higher do good. For every twelvemonth you delay your claim by your FRA, you lot get an viii% increase in your do good. That could be at to the lowest degree a 24% college monthly do good if y'all delay claiming until age 70. But, make sure to evaluate your decision based on how much you've saved for retirement, your other sources of income in retirement, and your expectations for longevity.
While many people could do good from waiting to age seventy to take Social Security payments, others may demand this source of guaranteed income sooner to help pay their bills, or they may anticipate not living long plenty to reap the rewards of delaying.
The downside of challenge early: Reduced benefits
Consider the following hypothetical case. Colleen is 62 as of 2022. If Colleen waits until age 67 (her FRA) to collect, she volition receive approximately $ii,000 a calendar month. However, if she begins taking benefits at historic period 62, she'll receive but $1,400 a month. This "early retirement" penalization is permanent and results in her receiving up to 30% less yr after year.
However, if Colleen waits until historic period 70, her monthly benefits will increase another 24% over what she would receive at her FRA, to a total of $two,480 per month.1 If she were to live to age 89, her lifetime benefits would be about $112,000 more than, or at to the lowest degree 24% greater, because she waited until age 70 to collect Social Security benefits.2 (Notation: All figures are in today's dollars and earlier tax. The actual do good would exist adapted for inflation and would perchance exist subject to income tax.)
Spouses and Social Security
You lot can claim Social Security benefits based on your spouse's work tape. If claiming spousal benefits provides more, claiming before your FRA on a spouse'south record means you lot'll lose even more than claiming on your own tape—the benefit reduction for a spouse is upwardly to 35% while the reduction for claiming your ain benefit is up to 30%. For case, if you're the spouse of Colleen in the higher up example and y'all are the aforementioned age, you'd exist eligible for just $650 a month at age 62—35% less than the $thousand a month yous would get at your FRA of 67.
Your decision to have benefits early on could outlast you. If you were to die before your spouse, they would be eligible to receive your monthly amount as a survivor benefit—if it'southward college than their own amount. But if you take your benefits early, say at age 62 versus waiting until age 70, your spouse's survivor Social Security benefit could be upward to 30% less for the remainder of their lifetime.
Span to Medicare at historic period 65
Retrieve that while yous are eligible for reduced Social Security benefits at 62, y'all won't be eligible for Medicare until age 65, so you will probably have to pay for private wellness insurance in the meantime. That can eat upwards a large chunk of your Social Security payments.
Read Viewpoints on Fidelity.com: Your bridge to Medicare
Financial benefits of working longer
Many people desire to retire as shortly equally information technology is financially feasible to do so, only it's crucial to consider the earning and investing power you may surrender if y'all stop working full-fourth dimension and take Social Security at 62. If you leave a task with proficient pay and benefits, it may be difficult ever to regain that level of compensation if y'all demand or desire to return to work afterward. Of grade, not anybody tin can keep working, merely information technology is something to consider if you are healthy and take the opportunity to stay in the workforce, in either a full-time or part-time chapters.
The compensation benefits of your task could also touch your Social Security. Some companies let stock awards to go on to belong (pay out, and as a result, incur income taxes) after retirement date, and even into years to follow. These payouts are considered income, and could cause your Social Security payment to be taxed, or taxed at a college level than in years after the awards have fully distributed. Delaying Social Security payments until those other income sources accept been reported for revenue enhancement purposes is worth consideration.
Tip: Women oftentimes live longer than men, and they're more likely to depend on ane income when they're older. Don't brand the mistake of coupling your decision to go out the workforce, peculiarly during COVID, with your Social Security claiming strategy. Remember, by the time you go into your 80s, you have fewer financial options, and so don't jump at the get-go opportunity to claim Social Security at age 62 just because you may want to quit your current job.
But there's fifty-fifty more than to the story. Every bit yous approach retirement, you're often at the upper end of your lifetime earnings trajectory—and of your ability to salvage more for retirement. In addition, if you can keep working, you can make "grab-upwards" contributions to a taxation-deferred workplace savings programme like a 401(chiliad) or 403(b) or a traditional or Roth IRA. Catch-up contributions allow you to gear up aside larger amounts of money for retirement.
Think, if you decide to finish working at 62, yous volition terminate tax-advantaged saving opportunities, and if you decide to claim Social Security early, you volition cap your Social Security benefits throughout your retirement—and you may need to begin to describe down your savings earlier than you want.
When you lot factor in longevity, health care, and the cost of your expected lifestyle in retirement, your decision on whether or not to claim Social Security at age 62 may go clearer.
Read Viewpoints on Fidelity.com: Social Security tips for working retirees
Adjacent steps to consider
See how claiming at different ages could impact your do good.
Create a retirement income plan in our Planning & Guidance Centre.
Explore options on when and how to take Social Security.
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Source: https://www.fidelity.com/viewpoints/retirement/social-security-at-62
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