One of the most important financial decisions an American worker faces is determining the best time to retire and start collecting Social Security benefits. While the “right” age to retire varies based on individual circumstances, knowing the pros and cons of each option can help you make a decision that aligns with your goals and financial needs.
Key Factors
Before deciding when to retire, the first step is ensuring you have at least 35 years of work history. Social Security calculates your benefits based on your highest-earning 35 years. If you have fewer than 35 years, zeros will be averaged in, which can significantly reduce your benefit amount.
Once you meet this requirement, you can explore the pros and cons of retiring at different ages.
Retirement Ages
At 62, you can start collecting Social Security benefits, but there’s a catch: your monthly benefit will be reduced by 30% compared to what you’d receive at full retirement age (FRA).
- Pros:
- Useful for those with health issues or a shorter life expectancy.
- Allows early access to income and an opportunity to stop working sooner.
- Cons:
- Permanent reduction in benefits.
- May not provide enough income for long-term needs.
Medicare Milestone
Age 65 is a popular retirement age, coinciding with Medicare eligibility. You’ll receive 86.7% of your full benefits at this age.
- Pros:
- Access to subsidized healthcare via Medicare.
- Smaller benefit reduction compared to retiring at 62.
- Cons:
- Still less than full retirement benefits.
Full Retirement Age (66–67)
For workers born in 1960 or later, FRA is 67. Retiring at this age means you’ll receive 100% of your calculated benefits.
- Pros:
- No reduction in benefits.
- A good balance between income security and health considerations.
- Cons:
- Requires working longer, which may not be feasible for everyone.
Age 70
If you delay collecting Social Security until age 70, your benefits increase by 8% for every year beyond FRA, maxing out at 124% of your benefit.
- Pros:
- The highest possible monthly benefit.
- Maximizes income for long-term financial security.
- Cons:
- Requires delaying payments for several years.
- Not feasible for those who need immediate income or cannot continue working.
Benefit Percentages
The percentage of your full retirement benefit you receive depends on your age when you begin collecting Social Security.
| Age | Percentage of Benefits |
|---|---|
| 62 | 70% |
| 63 | 75% |
| 64 | 80% |
| 65 | 86.7% |
| 66 | 93.3% |
| 67 | 100% |
| 68 | 108% |
| 69 | 116% |
| 70 | 124% |
These percentages provide a clear roadmap for how delaying retirement can significantly boost your monthly benefits.
Balancing Immediate Needs
While delaying retirement until 70 offers the maximum benefit, many Americans find it challenging to wait that long. With the average benefit for workers retiring at 70 being $1,963.48, the decision often depends on whether you have other income sources or savings to bridge the gap.
Ultimately, the right time to retire is a personal decision based on your financial situation, health, and lifestyle goals. Assess your needs, look into your options, and plan accordingly to ensure a comfortable and sustainable retirement.
FAQs
What is the earliest age to collect Social Security?
The earliest age is 62, with a 30% benefit reduction.
What happens if I retire at 65?
You’ll receive 86.7% of your full retirement benefit and qualify for Medicare.
What is full retirement age for those born in 1960?
Full retirement age is 67 for individuals born in 1960 or later.
How much do benefits increase if I delay until 70?
Benefits increase by 8% annually, up to 124% at age 70.
How many years of work are required for maximum benefits?
Social Security benefits are calculated based on your highest 35 years of earnings.
