Social Security is a federal program that provides income to seniors in the United States. Workers pay taxes toward Social Security during adulthood, and begin collecting benefits when they have reached a certain age and/or become retired. Seniors, many of whom are retired and no longer employed, receive monthly monetary payments through the program as a form of income.
Social Security is an extensive program with different rules for certain financial situations, so you should familiarize yourself with the basic regulations when developing a retirement plan. Doing this will help you understand the best time to apply for benefits based on your personal and financial situation in order to make the most out of your Social Security payments during retirement. The best age to begin collecting benefits varies from person to person, based on their own unique situation. Consider the following points to help in determining when you should apply for Social Security.
When Can I Apply For Benefits?
To determine the best time to apply for benefits, first consider what age you are qualified to begin collecting payments. Social Security uses a full retirement age, also called normal retirement age, as the age where a senior is able to collect unreduced benefits. The full retirement age where you can begin receiving Social Security payments depends on the year you were born. Use the following chart to determine what age you are eligible to receive benefits.
| Birth Year | Full Retirement Age | |
| 1937 and earlier | 65 | |
| 1938-1942 | 65 + 2 additional months per year | |
| 1943-1954 | 66 | |
| 1955-1959 | 66 + 2 additional months per year | |
| 1960 and later | 67 |
Older adults are able to apply for Social Security benefits before their normal retirement age, as early as age 62. However, monthly benefit amounts will be reduced. Seniors can also apply for Social Security after their full retirement age, with increased monthly benefit amounts.
You should apply for Social Security four months before you want to begin receiving payments. When choosing the best time to apply for benefits, consider your full retirement age and the monthly benefit payment you are eligible for. Consult the following section to learn more about monthly benefit amounts.
About Monthly Benefit Amounts
Determining the monetary amount you are eligible to collect through Social Security each month can help you make better retirement decisions and choose the most beneficial time to apply for the program. The Social Security benefit amount you are eligible to collect each month varies, depending on your previous income, age, birth year, date applied for the program, taxable earnings, whether or not you are currently employed and more. Any additional income you will receive from other sources while collecting Social Security, such as pensions, annuities and interest may affect your eligible benefit amount.
Using your personal and financial information, you can estimate your potential payment amount before applying for Social Security. The federal Social Security website provides a Retirement Estimator that uses your Social Security earnings record to give a general idea of the benefit amount you are eligible to receive. Benefit estimates can be used to help you determine when will be the best time for you to begin receiving Social Security benefits.
Remember, if you apply for Social Security benefits early or after your full retirement age, the amount you will receive over your lifetime is generally the same. However, there are pros and cons to both situations. Read the following sections to find out more about applying for Social Security early or late.
How to Apply For Benefits Early
For some seniors, applying for Social Security before the federal retirement age is necessary and/or beneficial. There are certain advantages and disadvantages that come with collecting benefits early. Receiving early retirement payments means you will collect benefits for a longer period of time, but for a lesser amount each month. The smaller payment for each month is meant to cover the extended period where you will be collecting benefits. For example, a senior with a retirement age of 66 who applies for Social Security at age 62 will receive payments reduced by 25 percent each month.
There are many factors to keep in mind when determining if applying for benefits early is right for you. Consider the following aspects before making a decision:
- Employment status. If you are still employed between age 62 and your normal retirement age, there may be restrictions on the amount you can earn and still collect Social Security. However, in some situations, applying for benefits early while being employed could be advantageous.
- Health. If you are in poor health, collecting Social Security benefits early could be beneficial.
- Insurance availability. If you are unemployed and begin collecting Social Security before age 65, you may lose health insurance provided by your employer. Most seniors are not eligible for Medicare until 65 years old.
- Long term plans. Consider the longevity in your family in order to plan your retirement benefits for the long term.
Learn About Waiting to Apply For Benefits
Another option for receiving Social Security payments is waiting until after your normal retirement age to obtain benefits. If you do not need to collect benefits when you reach your retirement age, it may be advantageous to delay applying for Social Security. When determining the right time to collect Social Security, consider whether your other sources of income, such as pensions, savings and annuities cover your cost of living for each year of retirement.
Another factor to consider for delayed benefits is your access to health insurance coverage and ability to cover health care costs without Social Security payments. Seniors who wait to apply for the program should be sure to apply for Medicare three months before your 65th birthday, in order to avoid delayed or more expensive coverage.
If you decide to delay receiving benefits, you are eligible to collect an increased Social Security payment amount until age 70. The percentage increase on delayed retirement payments depends on the year you were born. The largest increase on your future benefit payments is available at 69 years old. Once you reach age 70, an increased payment amount is no longer applied. Keep in mind that delayed payments are only increased because they cover a shorter period of time for you to collect benefits. Your lifetime total Social Security benefit amount is the same whether you begin collecting benefits early, at or after your normal retirement age.
Registering for Social Security before 70 years old, but after your full retirement age allows you to receive the largest amount of monthly benefits over time. However, benefits should only be delayed if your alternate sources of income cover the living expenses for each year where you do not collect Social Security payments.
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