target="_blank" rel="nofollow" href="#fb3_img_img_3fe5355f-93fc-514b-83f5-0326853c2686.png" alt="Remember"/> Social Security is social insurance for people of all income levels. SSI is an assistance program for people with very little income.
Chapter 3
Deciding When to Start Collecting Retirement Benefits
IN THIS CHAPTER
I know people who are sick of their jobs, fed up with the demands of the work world, and ready to begin collecting Social Security the very first day they can get it. I also know people who love their jobs, see themselves as forever young, and are pained even to think about collecting retirement benefits. Where do you fit on the spectrum?
Of course, the decision on when to start collecting Social Security is personal. Your priorities and needs, your spouse’s needs, your financial resources, your health, and your expected longevity all can shape your attitude about collecting Social Security.
Your decision on when to begin collecting Social Security retirement benefits may be the most important financial decision you ever make. Starting too early can cost you tens of thousands of dollars. Worse, jumping the gun may hurt the most in your final years, when it’s too late to do anything about it.
In this chapter, I fill you in on the most important factors to consider in order to make the right decision for you. There is no one right answer. My goal is for you to make the decision about when to collect Social Security fully armed with all the information you need.
Paying Attention to Your Full Retirement Age
A key consideration in choosing a start date for collecting Social Security is something called your full retirement age. The Social Security Administration (SSA) gives you a window of several years before and after your full retirement age in which to begin collecting your retirement benefits, starting at 62. In the following sections, you find out how to determine this age (based on your year of birth) and how it affects the amount of your monthly benefit.
Determining your full retirement age
Your first question is probably this: How much Social Security am I going to get? The answer: It depends. The first step is knowing your full retirement age. If you collect Social Security before reaching your full retirement age, you’ll get less each month — potentially a lot less, for the rest of your life. If you collect Social Security after reaching your full retirement age, you’ll get more each month.
The earliest age at which you can start collecting retirement benefits is 62, and the latest is 70. Your full retirement age falls somewhere in between. Table 3-1 shows a person’s full retirement age based on his or her year of birth.
TABLE 3-1 Full Retirement Age Based on Year of Birth
| Year of Birth* | Full Retirement Age |
|---|---|
| 1937 or earlier | 65 years |
| 1938 | 65 years and 2 months |
| 1939 | 65 years and 4 months |
| 1940 | 65 years and 6 months |
| 1941 | 65 years and 8 months |
| 1942 | 65 years and 10 months |
| 1943–1954 | 66 years |
| 1955 | 66 years and 2 months |
| 1956 | 66 years and 4 months |
| 1957 | 66 years and 6 months |
| 1958 | 66 years and 8 months |
| 1959 | 66 years and 10 months |
| 1960 and later | 67 years |
* If you were born on January 1, refer to the previous year. Full retirement age may be slightly different for survivor benefits.
Estimating how much you’ll get each month based on when you retire
After you figure out your full retirement age (see the preceding section), you can get a ballpark idea of your monthly benefit. Currently, the average retirement benefit is $1,503 per month (this is being written in January 2020), but benefits go much higher, depending on your earnings history and when you begin collecting.
www.ssa.gov/oact/quickcalc or the Retirement Estimator at www.ssa.gov/estimator. They can give you projected amounts for retiring at different ages, such as 62, waiting for your full retirement age (according to Table 3-1), or delaying all the way until 70. You also can get estimates customized to your personal situation by using AARP’s Social Security Benefits
