The age you begin to collect Social Security benefits affects the payments you will receive for the rest of your life. Checks are reduced if you sign up as soon as possible at age 62, but are increased if you delay claiming up until age 70. Here's when most people sign up for Social Security:
62. A smaller proportion of people have been claiming Social Security at age 62 in recent years, but it continues to be the most popular age to begin receiving payments. Some 45 percent of men born in 1943 and 1944 signed up for retirement benefits at age 62, down from 50 percent of people born between 1938 and 1942, and a peak of 57 percent of men born between 1930 and 1934, according to a 2013 Urban Institute analysis of U.S. Census Bureau data. The share of women claiming Social Security benefits at age 62 has also declined over the past decade, but women continue to be more likely to claim early than men. Half of women born in 1943 or 1944 claimed at age 62, compared with 60 percent of those born between 1935 and 1937.
Social Security benefits are reduced for workers who sign up at age 62, and the amount of the reduction has recently increased from 20 percent for people born in 1937 or earlier to 25 percent for baby boomers born between 1943 and 1954. "If you claim earlier you are getting more of a penalty now than you used to," says Richard Johnson, a senior fellow and director of the program on retirement policy at the Urban Institute, a nonpartisan research firm. The reduction in benefits for people claiming at age 62 will further increase to 30 percent for everyone born in 1960 or later under current law.
65. Signing up for Social Security at age 65 is declining in popularity, but the age many people associate with retirement remains the second most popular claiming age among women and third among men. Nearly a quarter (24 percent) of men born between 1935 and 1937 signed up for Social Security at age 65, which is the age workers born in 1937 or earlier qualified for unreduced Social Security benefits. But retirement at 65 declined to 14 percent of those born in 1943 and 1944, whose full retirement age increased to 66. People born between 1943 and 1954 get 6.7 percent smaller checks if they claim at age 65. The proportion of women signing up at age 65 stayed roughly constant throughout the period studied at about 16 percent.
However, about twice as many people claim Social Security at age 65 as at either ages 63 or 64, perhaps because Medicare eligibility begins at 65 and allows people whose health insurance is tied to their employment to retire. "Most people can't afford to stop working unless they have access to health benefits," Johnson says. "Even if they would prefer to stop working and collect Social Security sooner, they might need to wait until 65."
66. Claiming Social Security at age 66 has recently surged in popularity, due to the increase in the full retirement age to 66 for everyone born between 1943 and 1954. Some 19 percent of men and 13 percent of women born in 1943 and 1944 signed up at age 66, compared to about 1 percent among earlier groups of retirees. "It's striking how many people sign up in the month at which they reach the full retirement age," Johnson says. "The fact that the government has said that 66 and 0 months is the retirement age really seems to resonate with people. The government, just by how they frame the issue, can really induce people's retirement ages."
Age 66 is when most baby boomers will qualify for the full amount of Social Security they have earned. "If they decide to wait until full retirement age, which would be 66 right now, then they won't have any reduction going forward," says Samantha Macchia, a certified financial planner for Summit Financial Strategies in Columbus, Ohio. "If at all possible, and certainly if you are still in the workforce, you should wait until your full retirement age at least." Age 66 is also the first year that your benefit will not be temporarily withheld if you work and claim Social Security benefits at the same time.
67 or later. Only 6 percent of men and 5 percent of women born in 1943 and 1944 signed up for Social Security at age 67 or later, the Urban Institute found. But the benefits of further delaying your Social Security payments can be enormous. Payments increase by 8 percent for each year of delayed claiming up until age 70. After age 70 there is no additional financial incentive to delay starting your payments. Carl von dem Bussche, a certified financial planner for Financial Guidance Group in Palm Harbor, Fla., says he doesn't plan on taking Social Security until age 70 because of the 8 percent accumulation rate between ages 66 and 70. "It's a pretty nice return if you have the finances in place to be able to delay it, and that's a risk-free return on your money," he says. "If you have had cancer and you are ill, then it's better to get some of your benefit than none of your benefit. If you have longevity in your family, then it often makes sense to choose to take your benefit later."
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