You basically have three choices. Take it early. Take it at "full retirement age". Wait until you're 70. The general rule is to wait as long as possible. That way you get the largest total benefit over the coarse of your life. But if you have a hard time making your bills without the benefits, Are in poor health, or you are the lower earning spouse and your spouse can wait for a higher benefit. Then you are a good candidate for early benefits. You should probably wait if you are still working, In good health with longevity running in your family, Or are the higher earning spouse and want to leave the largest possible benefit for your spouse. Here is a chart showing who is eligible when.
| If you were born in ... | Your full retirement age is ... |
| 1937 or earlier | 65 |
| 1938 | 65 and 2 months |
| 1939 | 65 and 4 months |
| 1940 | 65 and 6 months |
| 1941 | 65 and 8 months |
| 1942 | 65 and 10 months |
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 or later | 67 |
The earliest you can start receiving Social Security retirement benefits is age 62. If you start your retirement benefits at age 62, your monthly benefit amount is reduced by about 30 percent.
- 63 is about 25 percent;
- 64 is about 20 percent;
- 65 is about 13.3 percent; and
- 66 is about 6.7 percent.
| Year of Birth* | Monthly Rate of Increase | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1933-1934 | 5.5% | ||||||||||
| 1935-1936 | 6.0% | 1/2 of 1% | |||||||||
| 1937-1938 | 6.5% | 13/24 of 1% | |||||||||
| 1939-1940 | 7.0% | 7/12 of 1% | |||||||||
| 1941-1942 | 7.5% | 5/8 of 1% | |||||||||
| 1943 or later | 8.0% | 2/3 of 1% | |||||||||
| Note: If you were born on January 1st, you should refer to the rate of increase for the previous year. * | |||||||||||
This chart helps you visualize the different retirement age scenarios,
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The different types of Social Security claims are
- Personal benefits are when you receive SSI benefits based on your work record.
- Spousal benefits are when your receive benefits up to 50% of your Spouses work record. If both spouses are enrolled in the SSA system you can take either your benefit or up to 50% of your spouses benefit. Whichever is greater. Taking a Spousal benefit does not affect what the higher earning Spouse will receive under their own Personal benefit. Divorce complicates things some. Under certain conditions you can apply for 50% of an Ex-Spouses benefits. Please check with http://ssa.gov for more info.
- Disability benefits can be applied for anytime you become disabled for longer than 12 months and can no longer work. You must be "insured" meaning that you have worked and contributed to your SSI for a certain minimum amount of time. These are on a case by case basis so again I need to refer you to http://ssa.gov for more info.
- Death benefit - A surviving widow or widower may be eligible to receive a special death benefit payment of $255.00 on the worker's record. This payment can be made only once to a spouse or minor children who meet certain requirements.
- Survivor benefits is most commonly when you receive your deceased spouses benefits because it is larger than yours. Again, So many options and permutations. Please visit http://ssa.gov for more info.
62/70 split - There are ways to maximize your benefits as a married couple. Here is one example. Let's say that a retired couple are both 62 and only the man worked enough to qualify for SSA personal benefits. They both apply for benefits but then the husband suspends his payments. This allows for a larger check for him the longer he waits. This also qualifies his wife for up to a 50% Spousal benefit since he is now in the system. She gets the largest possible benefit she could get and by waiting until 70 he gets the his largest total benefit possible. If the man waits to apply for SSA benefits until 70 his wife can not receive benefits until then due to her lack of a work record.
It's little known that your medicare premiums part B&D and taxes are withheld from your gross amount. So the amount you see on your SSA statement might not be what you actually get. If you take your benefits early thinking that you can make it on the reduced amount you may be in for a big surprise at age 65 when Medicare kicks in.
When you take your SSI benefits you have a year to change your mind. You will need to repay all of your benefits to reset your benefit calculations. You can only change your mind once though. Another option is to just suspend your benefits. Your payment amount will grow as long as you wait.
Sources
* http://ssa.gov
^ http://www.schwab.com/public/schwab/resource_center/expert_insight/retirement_strategies/planning/when_should_you_take_social_security.html
http://www.cbsnews.com/8301-505146_162-51396960/when-to-take-social-security-benefits/
Chart was very helpful, thx.
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