- Americans can begin claiming reduced Social Security benefits at age 62.
- The longer a person waits to claim Social Security, the more money they will get.
- Each year a person delays Social Security until age 70, their benefit – the amount they would have begun receiving at either 66 or 67 – will increase by up to 8%.
- Usually, delaying Social Security benefits will be most beneficial for those who expect to live a long life, but there are several factors to consider.
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There are no hard-and-fast rules for how a person should retire in America. Some retire early, while others never leave work at all.
But when it comes to Social Security – the federal program that pays out monthly benefits to disabled and retirement-age Americans – the incentive to continue working, or at least to delay benefits, is fairly simple: The longer you wait, the more money you’ll get.
The full retirement age for today’s workers is between 66 (if born prior to 1960) and 67 (if born in 1960 or later). That’s the age a person who worked at least 10 years can begin claiming 100% of their Social Security benefit, which is equal to an average of monthly wages for their 35 highest-earning years, adjusted for inflation.
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Anyone can create a free My Social Security account to find out what their pretax monthly Social Security benefit will be based on current earnings, and see how that could change depending on the date they leave work. For those in good health or with a greater chance of longevity, it may be worth it to hold out.
Age 70 is the latest it makes sense to claim Social Security benefits. With each 12-month period that benefits are delayed beyond a person’s full retirement age (up to age 70), their benefit increases by up to 8% for a maximum of either 24% for those born in 1960 or later or 32% for those born before 1960.
The benefit can increase up to age 70, regardless of whether or not the person actually retires from work. Still, the highest possible Social Security benefit for someone retiring in 2019 is $US2,849 a month. You can claim benefits after age 70, but the amount will no longer increase.
Let’s say John, who was born in 1955, is in good health and enjoys his job. John’s full retirement age is exactly 66 and two months, at which point he can claim 100% of his monthly Social Security benefit of $US1,420 (the 2019 average benefit). John decides to continue working for a few more years, until his 69th birthday, and delays his benefit.
By the time John claims his Social Security benefit at 69, his monthly payout will be $US1,742 – 122.7% of his full retirement age benefit. By delaying, John increased his monthly Social Security income by about $US320. Note that the rules are different for spouses – consult the Social Security website for details.
There are several factors to consider if you’re weighing whether to delay your benefit, but experts say it may be worth it if you’re able to subsist on other income, such as savings or investments or a paycheck from a current job. Usually, delaying benefits will be most beneficial for those who expect to live into their 80s or longer, but be sure to check out the Social Security Administration’s full list of things to consider.
Conversely, you can opt to take Social Security benefits at the earliest possible time, age 62, but you’ll only receive 75% of your full benefit if born before 1960 and 70% of your benefit if born in 1960 or later.
Keep in mind that if you do decide to delay Social Security benefits, you’ll still become eligible for Medicare at age 65. If you don’t enroll in Medicare Part A (hospital insurance) three months before your 65th birthday, your coverage may be delayed or cost more, whether you plan to continue working, retire at full retirement age or later, or delay Social Security benefits.
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