Planning for retirement takes a lot of time, effort and sometimes, foresight, and probably one of the most important but complicated questions to answer is what the best age is to start collecting Social Security.

According to the Social Security Administration, as of June 2024, nearly 9 in 10 people aged 65 and older were collecting Social Security benefits, which means that many Americans did not make it to full retirement age (FRA), the age at which you’re eligible to receive 100% of your expected Social Security benefits, before starting to collect. A person’s FRA varies depending on the year in which they were born.

The current brackets for one’s FRA are as follows:

– Born between 1943 to 1954: 66

– Born in 1955: 66 and 2 months

– Born in 1956: 66 and 4 months

– Born in 1957: 66 and 6 months

– Born in 1958: 66 and 8 months

– Born in 1959: 66 and 10 months

– Born 1960 or later: 67

This may be one of the reasons why it is so hard to decide when to retire, as FRA is not the same for everyone, and the earliest age at which you can claim benefits is 62 years old, some people do not see the value in waiting, especially if you have heath issues that prevent you from working or, in the other direction, if you are wealthy enough that you can afford to nor work.

Who is entitled to collect Retirement benefits

Workers accumulate Social Security “credits” by paying taxes on their earnings. Most people need 40 credits, which typically requires about 10 years of work, to be eligible for retirement benefits. The monthly benefit amount depends on your highest 35 earning years—if you worked fewer years, zeroes are included in your average, which would lower your average and final benefit amount.

Since the amount in benefits you receive is entirely dependent on the payroll taxes you paid, working for longer and in a higher paying job or position will mean that you will collect more benefits when the time comes.

The estimated average monthly Social Security retirement benefit was $1,907 as of January 2024, according to the SSA, but that varies from person to person depending on a multitude of factors, like when they started claiming. For each month you claim before your FRA your benefit drops by about 5/9 of 1% for the first 36 months, and 5/12 of 1% for any additional months. So, if your FRA is 67 and you claim at 62, you’d get about 30% less.

Per the IRS “For example, if the number of reduction months is 60 (the maximum number for retirement at 62 when normal retirement age is 67), then the benefit is reduced by 30 percent. This maximum reduction is calculated as 36 months times 5/9 of 1 percent plus 24 months times 5/12 of 1 percent.”

Conversely, if you wait beyond your FRA to start benefits, they increase due to “delayed retirement credits” (DRCs). For each month you delay, your benefit rises by a specific percentage, capping at age 70. For those born in 1943 or later, this increase is 8% annually. Waiting until 70 means receiving the highest possible benefit but waiting past 70 does not add any extra money.

The perfect age to collect benefits does not exist. It depends entirely on personal circumstances, and while yes, doing the math is important, weighting your life circumstances is even more important. Working while ill or when you do not need to ay make your quality of life worse in the long run, but if you enjoy your career, taking a step back without fully leaving the workforce may be enough for you to keep working for longer and get the maximum benefit available.

Note: Thank you for visiting our website! We strive to keep you informed with the latest updates based on expected timelines, although please note that we are not affiliated with any official bodies. Our team is committed to ensuring accuracy and transparency in our reporting, verifying all information before publication. We aim to bring you reliable news, and if you have any questions or concerns about our content, feel free to reach out to us via email. We appreciate your trust and support!