The landscape · Investing and taxes
Social Security claiming age, 62 to 70
The monthly benefit is set by the age at which it starts, reduced for every month before full retirement age and increased for every month of waiting after it, up to age 70.
Who this exists for. This exists for a person approaching retirement who can start Social Security retirement benefits at any month from age 62 to 70. Ticks that show it: I am 55 or older; I am 59 and a half or older; I am 60 to 63; I am 65 or older.
How it works
Full retirement age is 67 for people born in 1960 or later. The benefit at full retirement age is the base figure. Starting at 62 cuts it by five ninths of one percent for each of the first 36 months early and five twelfths of one percent for each month beyond that, which is a 30 percent reduction at 62 for someone whose full age is 67. Waiting past full retirement age adds two thirds of one percent per month, 8 percent a year, until 70, where a person with a full age of 67 receives 124 percent of the base. The reduction and the credits are permanent. A person who claims before full retirement age and keeps working has benefits withheld above an earnings line, this year's official ss earnings test limit (not yet verified here; see the official source below), with the withheld amount credited back later.
What it gives
Waiting raises the monthly check for life, and a surviving spouse inherits the higher figure.
Claiming early puts money in hand sooner for someone who needs it or has a short life expectancy.
The decision can be undone within twelve months by repaying what was received.
What it costs, or where the catch is
The early reduction is permanent and passes to a survivor.
Working while claiming early can see benefits withheld above the earnings line.
Delaying means living on other savings in the meantime, and nothing is paid to a person who dies before claiming.
A worked example
Nell's benefit at her full retirement age of 67 is $2,000 a month. At 62 it would be 70 percent of that, which is $1,400, since $2,000 times 0.70 is $1,400. At 70 it would be 124 percent, which is $2,480. The difference between claiming at 62 and 70 is $1,080 a month for life, before cost of living increases, and the person who waits gives up 96 months of the smaller check, which is $134,400, to get it.
Where it goes wrong
The common miss is claiming at 62 by default, without seeing the number at 67 and 70 on the Social Security statement that is available online.
Who confirms it for you
For your own numbers, a benefits counselor at Social Security. This page explains how the rule works for people in general; it does not know your situation and does not tell you what to do.
The official source
Social Security: Starting your retirement benefits early. Every figure that changes by year comes from the site's rules table, which the watcher checks against the official page on a schedule; where a figure is not yet verified, this page says so instead of printing a number.
Ask about Social Security claiming age, 62 to 70
A model reads this page and answers from it. It will say when the answer is not on the page. Education, not personalized advice.
Nearby doors
- The higher catch up at ages 60 to 63
This applies when a worker is 60, 61, 62, or 63 at the end of the year and the plan has adopted the higher catch up amount.
- The rule of 55
This applies when a worker leaves an employer in or after the year they turn 55 and takes money from that employer's plan before 59 and a half.
- Roth conversions and the low income year
This exists for a person with pretax money in a traditional IRA or old workplace plan, and it matters most in a year when income is unusually low.
- The two Roth five year rules
This applies when a person holds a Roth IRA and takes money out, since two separate five year clocks decide whether earnings and converted amounts come out free of tax and penalty.
- The gift tax annual exclusion and lifetime exemption
This applies when a person gives money or property to another person without getting something of equal value back.
- Social Security spousal and survivor benefits
This exists for a spouse, former spouse, or widow or widower of a worker who paid into Social Security.
Education, not advice. Wealthy Habitat explains how rules work and never recommends what to do with your money. The No Advice Disclosure.