Social Security provides income to millions of seniors, and once you retire, there’s a good chance you’ll end up counting on it as well. It’s crucial that you file for benefits at the right time, because the age you claim Social Security at will dictate how much money you collect on a monthly basis for the rest of your life.
Though your benefits are calculated by taking an inflation-adjusted average of your wages during your 35 highest-paid income-earning years, that number can change based on when you file for Social Security. Here are four popular choices for claiming benefits you should know about.
1. Age 62
Age 62 is the earliest age you’re allowed to file for benefits, and not surprisingly, it’s also the most popular among seniors. The upside of claiming Social Security at 62 is getting your money as soon as you’re eligible. The downside, however, is that you’ll face the greatest possible reduction in benefits you can be hit with.
You’re not entitled to your full monthly benefit based on your work record until you reach full retirement age, which, as we’ll discuss in a bit, is either 66, 67, or somewhere in between. For each month you file ahead of full retirement age, your benefits get reduced. Filing at 62 will cut your benefits by anywhere from 25% to 30%, depending on your specific full retirement age, and that reduction will remain in effect permanently unless you withdraw your benefits application within a year and repay all of the money you collect. Therefore, make sure you have a good reason to take benefits at 62 before going that route.
2. Age 65
Age 65 is when seniors become eligible for health coverage under Medicare. As such, it’s also a common age to sign up for Social Security. That said, don’t be fooled into thinking you have to claim Social Security to get on Medicare, because you don’t. The only advantage of being on Social Security first (or simultaneously) is that you can have your Medicare premiums deducted from your benefits so you don’t need to deal with paying them yourself. But if you claim benefits at 65, you’ll automatically reduce them in the process (though not to the same extent as filing at 62).
Learn more about: 4 Popular Ages to Claim Social Security: Which Is Right for You?