The response is straightforward when it comes to Social Security and when you should begin receiving it: It depends. A little bit of probability theory, behavioral economics, and math may be involved in determining when you should begin receiving benefits.
While it is possible to begin receiving Social Security benefits as early as age 62, there can be significant penalties associated with doing so before reaching full retirement age (FRA). Still, some choose that path. As per the Social Security Administration (SSA), 247 percent of the present retirees started receiving their benefits prior to reaching retirement age. Why would they do that? And should you?.
The year 1960 marks a significant milestone in terms of retirement age for Social Security benefits. If you were born in 1960, your full retirement age is 67, meaning you can begin receiving your full retirement benefits without any reductions. However, you have the flexibility to delay retirement and receive increased benefits, or start receiving benefits earlier with reduced amounts.
Full Retirement Age and Benefit Amounts
- Full Retirement Age: 67
- Benefit at Full Retirement Age: 100% of your monthly benefit
- Benefit if Delaying Retirement: Increases by a certain percentage for each month you delay, up to age 70
- Maximum Benefit Increase: 124% of your monthly benefit if you start receiving benefits at age 70
- Benefit if Starting Early: Reduced by a certain percentage for each month you start receiving benefits before age 67
Delayed Retirement Benefits
Delaying retirement beyond your full retirement age can significantly increase your monthly benefits. For each month you delay, your benefit increases by a certain percentage, as shown in the table below.
| Age at which you start receiving benefits | Benefit percentage |
|---|---|
| 67 | 100% |
| 67 + 1 month | 100.7% |
| 67 + 2 months | 101.3% |
| … | … |
| 70 | 124% |
By waiting until age 70 to start receiving benefits, you can increase your monthly benefit by 24%. This can make a substantial difference in your retirement income, especially if you plan to live a long life.
Early Retirement Benefits
If you need to start receiving benefits before your full retirement age, you can do so, but your monthly benefit will be reduced. The reduction depends on the number of months you start receiving benefits early.
Medicare and Delayed Retirement
It’s important to remember that Medicare eligibility begins at age 65, regardless of your retirement age. If you delay retirement beyond age 65, you may want to consider signing up for Medicare Part B to avoid potential late enrollment penalties.
Additional Considerations
- Life Expectancy: Consider your life expectancy when deciding whether to delay retirement. If you expect to live a long life, delaying retirement may be beneficial.
- Health: Your health status can also influence your decision. If you have health concerns, you may want to consider starting benefits earlier to ensure you have adequate income.
- Financial Situation: Your financial situation should also be taken into account. If you have sufficient savings and investments, you may have more flexibility in delaying retirement.
Seeking Professional Advice
Consulting with a financial advisor can help you make informed decisions about your retirement age and Social Security benefits. They can analyze your specific situation and provide personalized recommendations to maximize your retirement income.
Understanding your full retirement age and the impact of delaying or starting benefits early is crucial for planning your retirement. If you were born in 1960, your full retirement age is 67, but you have the flexibility to choose when to start receiving benefits based on your individual circumstances. By carefully considering the factors discussed above, you can make informed decisions that will help you achieve your retirement goals.
Benefits of waiting to collect Social Security monthly payments
Source: Social Security Administration. Sample data for illustrative purposes only. Depending on their work history, birth year, and other variables, each person’s monthly benefit will differ.
When you collect at age 2062%, you receive 20700% of your entire monthly benefit, which in this example is $1,161%. When you retire at full age, you receive 20670% of your benefit, which is $1,658, and when you collect at age 2070% of your benefit, which is C2%BD, your payments are 20124% of your total benefit amount, or $2,056% in this example.
But keep in mind that your work and earning history will ultimately determine your benefits. Your anticipated benefits between the ages of 62 and 70, assuming you keep working and earning roughly the same amount throughout those years, are listed on your yearly Social Security statement. You can request a copy of your annual statement or access it online via the SSA portal if you require one.
First, the math … and the exceptions
If youve ever filed your own tax return, you know that government policies and calculations can be complicated. Social Security is no exception. The basic FRA depends on your birth year. For anyone born in 1960 or later, full retirement age is 67. For those born in 1955 through to the end of 1959 (technically, January 1, 19601), full retirement age ranges between 66 and 2 months and 66 and 10 months. If you were born before 1955, youve already reached age 66 and full retirement age. For more specifics on FRA, refer to the full retirement age chart on the SSA website. When assessing your own FRA, know that, by some estimates, there are about 2,700 rules, exceptions, and contingencies covering spousal and survivor benefits, disabilities, working part-time while drawing benefits, and more.
You don’t need a PhD in quantitative analysis to understand how the math works, but it might be helpful to know a little bit about high school algebra. In other words, if you retire earlier than 336 months prior to your FRA, your benefits will be reduced by 9% of 1% for each month that you begin early. In the event that you retire precisely three years (36% months) ahead of schedule, your benefits will be reduced by 2020% (5/9% 20x 200). 01 x 36 = 0. 20). For every month that you retire earlier than or above the threshold of twenty-three months, your benefits will be decreased by an extra ten percent, or five percent, every year.
Dont want to do the math? A Social Security retirement age calculator is available on the SSA.gov website. Once there, you can select any birth year to see how much your monthly benefit will be reduced if you choose to retire early. The retirement age chart also shows the reduction in spousal benefits should you choose early retirement.
Good things come to those who wait: Just as drawing benefits early comes at a price, delaying your Social Security check has its benefits. Pushing your retirement beyond your FRA can make you eligible for an additional credit of up to 8% per year, up to three years, depending on your birth year. For example, a person born in 1960 would get 100% of her monthly benefit if she retired at age 67. If she waited until age 70, her monthly benefit would be 124%. Once again, the SSA website can show the potential benefit should you choose to wait. In fact, the site has 11 different calculators covering benefits, reductions, spouse benefits, life expectancy, and earnings tests.
Example of Social Security retirement age chart: Would you prefer to view the data visually? The average monthly Social Security benefit in 2022 will be $1,658. The following chart illustrates how this sum would vary based on a person’s preference to start receiving benefits at their FRA, later, or sooner. Remember: This is an example based on 2022 averages. Your birth year, work history, and other variables will affect your monthly benefit. Additionally, the government determines whether to add a cost-of-living adjustment, or COLA, to monthly benefits using data from the Consumer Price Index (CPI) each year.
Born in 1960 & later: How much can you get in Social Security Retirement benefits?
FAQ
What is my full retirement age if I was born in 1960?
When can I retire if I was born in 1960?
Is it better to take Social Security at 62 or 67?
At what age can I get Medicare if I was born in 1960?
What is my social security benefit if I was born in 1960?
* If your birthday is on the 1 st of the month, we figure your benefit as if your birthday were in the previous month. If you were born in 1960 your full retirement age is 67. Find out how your Social Security benefits will be affected based on when you begin receiving benefits.
What is my full retirement age?
But your full retirement age, defined as the age at which you can begin receiving your full Social Security retirement benefits, is determined by the year you were born. If you were born in 1960, your full retirement age is 67. That means you must wait until you are 67 years old in 2027 to collect 100% of your Social Security retirement benefits.
What if I was born in 1960?
And you are the: Wage Earner, the Retirement Benefit you will receive is reduced to And you are the: Spouse, the Retirement Benefit you will receive is reduced to * If your birthday is on the 1 st of the month, we figure your benefit as if your birthday were in the previous month. If you were born in 1960 your full retirement age is 67.