You can start collecting your Social Security benefits as early as age 62, or you can delay doing so -- until age 70, the last age at which it can be worth it to delay. Most people don't do a lot of waiting, and they start their checks rolling at age 62 or 63.
Starting to collect benefits early can make a lot of sense for some people, such as those who simply need that income as soon as possible. But for those who can delay, delaying may be the best move. Here's why.
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1. You can collect more by delaying
Know that each of us has a full retirement age -- the age at which we're eligible to collect the full benefits to which we're entitled, based on our earnings record. For most of us, that age is 66 or 67. For those born in 1960 or later, it's 67.
Starting to collect benefits before your full retirement age will make them smaller -- though you'll collect more checks, in total -- and delaying beyond it will make them bigger, though you'll collect fewer total checks. For those who live an average-length life, you'll collect roughly the same amount in total from the program no matter when you turn on the spigot.
Many of us stand a decent chance of living a life that's shorter or longer than average, so that should factor into our decision-making about when to start collecting. The table below shows what percentage of your full benefits you'll receive, depending on when you start.
|
Start Collecting at: |
Full retirement age of 66 |
Full retirement age of 67 |
|---|---|---|
|
62 |
75% |
70% |
|
63 |
80% |
75% |
|
64 |
86.7% |
80% |
|
65 |
93.3% |
86.7% |
|
66 |
100% |
93.3% |
|
67 |
108% |
100% |
|
68 |
116% |
108% |
|
69 |
124% |
116% |
|
70 |
132% |
124% |
Data source: Social Security Administration.
Obviously, if you can delay until age 70, you'll get the fattest checks -- bigger by 24% or possibly even 32%.
2. Your future COLA increases will be bigger
Every year or so, the Social Security Administration (SSA) hikes all beneficiaries' benefits via cost-of-living adjustments, or "COLAs," to help retirees' income keep up with inflation. These COLAs have typically been relatively modest -- often between 0% and 4% or 5%. We're currently living in a period with higher-than-usual inflation, so increases have been high -- 5.9% in 2021 and 8.7% in 2022.
While those may look like generous increases, due to the way they're determined, they won't allow all recipients to keep up with inflation. That's because while there are many indexes that measure inflation, the one used by the SSA doesn't best reflect typical spending by older people, who tend to spend more on healthcare and less on gasoline and education.
Still, any increase is very welcome and very helpful in fighting inflation. And the bigger your initial benefit, the bigger all your future COLA increases will be. Consider monthly benefits of $1,500 and $2,500: An 8.7% increase would result in bumps of $130.50 and $217.50 per month, respectively.
3. You or your spouse might need your maximized benefit
Another reason to consider delaying until age 70 or close to it is this: Imagine that you're married and you and your spouse have very different earning histories. While you're both alive and collecting Social Security benefits, you'll enjoy two income streams coming into your household. When one of you dies, though, the survivor will suddenly only be collecting one benefit -- whichever is bigger. So it can be worth it for the higher earner to try to maximize their benefit.
These are some good reasons to consider delaying starting to collect Social Security. It's easier said than done, though. You might achieve it by working a few more years, or you might opt to draw more heavily on retirement accounts such as IRAs or other savings until you hit 70 or so.
Take some time to learn more about Social Security, as the decisions you make regarding it can have quite an effect.
