When Should You Take Social Security Benefits?

Many people assume they must begin receiving Social Security benefits as soon as they reach their normal retirement age, but taking benefits is never mandatory. Should you take Social Security early, on time or later?

First, remember normal retirement age is 65 for those born in 1937 or earlier and goes up for those born in 1938 or later; it’s 67 if you were born after 1959.

Regardless of your normal retirement age, you may begin taking benefits as early as age 62. However, your benefits will be reduced by a certain percentage for each month before your normal retirement age that you receive benefits.

You can also defer Social Security benefits until after your normal retirement age, in which case they will be increased by a certain percentage for each month past your normal retirement age that you delay benefits, up to age 70.

So, should you start collecting benefits as early as age 62, wait until normal retirement age, or delay as late as age 70?

Things to Consider

One major factor to consider is your life expectancy. Social Security calculates payments so that if you start early, the smaller payments you collect over a longer time equal the larger payments over a shorter period of time you would have received had you started at normal retirement age or as late as age 70. However, all these payments are based on your normal life expectancy. If you live longer, delaying benefits will result in greater monthly payments and a potentially higher lifetime total.

You may also want to consider whether you actually need the benefits or will save and invest them. Your personal tax situation could also be a factor.

A financial advisor can help you determine when it is best to take Social Security benefits. Or call (800) 772-1213 for the location of a Social Security Administration office near you, where advice is available free of charge.

June 2009