Choosing When to Start Receiving Social Security Retirement Benefits

You can begin taking retirement benefits whenever you choose between age 62 and age 70.

The social security program allows you to begin receiving benefits the month after you reach age 62, or to wait until your full retirement age, or even later. The longer you wait, the fewer checks you'll receive. But the checks will be bigger if your wait (up to age 70), so a delay will produce a greater total benefit if you live long enough. The decision about when to start taking your benefits is partly a gamble on how long you're going to live and partly a matter of economic circumstances and personal preferences.

Choose Any Month

Once you qualify for retirement benefits, you can choose to start them any month. Your starting date doesn't have to be at age 62 or at full retirement age. The amount of reduction for starting your benefit early (or increase for starting your benefit late) is calculated in small monthly increments, so that the benefit you'll get starting in one particular month is not much different than the benefit you would get starting the month before or the month after. Apart from the operation of the earnings test, discussed next, there isn't any point where you'll see a sudden dramatic change by waiting one more month.

Earnings Test

The earnings test may reduce your benefit during the period before you reach full retirement age if you have significant earnings during that period. If you're thinking about starting your retirement benefit before full retirement age while still working, you should determine whether your earnings will be great enough to cause a significant reduction in benefits. The reduction in benefits from the earnings test applies only to the years you have the earnings (and only until you reach full retirement age), but the reduction in benefits for taking early retirement benefits is permanent. It probably won't be a good move for you to take early retirement benefits if the earnings test will be a big factor.

Example: You're considering starting your benefit three years before reaching full retirement age. If you do so, your retirement benefit will be permanently reduced by 20%. This reduction is offset by the fact that you'll receive 36 additional monthly payments.

Which is more important, the permanent 20% reduction in benefits or the additional 36 payments? We'll see below that many people will do better in the long run if they start receiving benefits later, even when we take into account the 36 added payments at their full value. If the 36 added payments are significantly reduced by the earnings test, it becomes even more unlikely that the benefit of these added payments will outweigh the detriment of a permanently reduced monthly payment.
 

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