Social Security: Get to know your options
May 07, 2010
If you're preparing to retire, you probably have lots of questions about when to start claiming Social Security benefits. Your personal circumstances—such as whether you have other savings or sources of income—can affect the path you'll take.
How do my age and birth date affect my benefits?
Although you can begin to collect Social Security at age 62, you may not want—or need—to. The earlier you take your benefits, the more they'll be reduced throughout your retirement.
You can use the chart below to determine your full retirement age and the percentage of benefits you'll receive if you begin taking them at various ages.
| Birth year | Full retirement age | 62 | 63 | 64 | 65 | 66 | 67 |
|---|---|---|---|---|---|---|---|
Before 1938 |
65 years |
80.0% |
86.6% |
93.3% |
100.00% |
105.5% |
111.0%–113.0% |
1938 |
65 and 2 months |
79.1% |
85.5% |
92.2% |
98.8% |
105.4% |
112.0% |
1939 |
65 and 4 months |
78.3% |
84.4% |
91.1% |
97.7% |
104.6% |
111.6% |
1940 |
65 and 6 months |
77.5% |
83.3% |
90.0% |
96.6% |
103.5% |
110.5% |
1941 |
65 and 8 months |
76.6% |
82.2% |
88.8% |
95.5% |
102.5% |
110.0% |
1942 |
65 and 10 months |
75.8% |
81.1% |
87.7% |
94.4% |
101.2% |
108.7% |
1943–54 |
66 years |
75.0% |
80.0% |
86.6% |
93.3% |
100.0% |
108.0% |
1955 |
66 and 2 months |
74.1% |
79.1% |
85.5% |
92.2% |
98.8% |
106.6% |
1956 |
66 and 4 months |
73.3% |
78.3% |
84.4% |
91.1% |
97.7% |
105.3% |
1957 |
66 and 6 months |
72.5% |
77.5% |
83.3% |
90.0% |
96.6% |
104.0% |
1958 |
66 and 8 months |
71.6% |
76.5% |
82.2% |
88.8% |
95.5% |
102.6% |
1959 |
66 and 10 months |
70.8% |
75.8% |
81.1% |
87.7% |
94.4% |
101.3% |
1960 and after |
67 years |
70.0% |
75.0% |
80.0% |
86.6% |
93.3% |
100.0% |
Source: American Academy of Actuaries.
For example, if you were born in 1944, you'd be eligible to receive 100% of your Social Security benefits in 2010—once you've reached age 66. If you had started to take payments in 2006 (at age 62), they would have been reduced to 75% of their full value. If you instead waited until 2011 (at age 67) to receive benefits, you'd receive 108% of the full amount.
Will I lose benefits if I keep working?
If you start to collect Social Security before you stop working, you may forgo a portion of them.
| If you collect benefits . . . | And earn more than . . . | You'll forgo . . . |
|---|---|---|
Before you reach full retirement age |
$14,160 in 2010* |
$1 in benefits for each $2 above the limit |
In the year you reach full retirement age |
$37,680 in the months before you reach full retirement age, in 2010* |
$1 in benefits for each $3 above the limit |
In the month you reach full retirement age |
No limit |
None |
*Earnings include wages, self-employment, commissions, and bonuses. They do not include investment earnings, pensions, and distributions from retirement plans. Dollar amounts are indexed annually.
However, once you reach full retirement age, the Social Security Administration will recalculate your benefits to take into account any months in which your payments were reduced.
What other factors should I consider?
Your decision is an individual one; there is no "right" answer. Several considerations may influence you, including:
- Your current health and family's longevity history.
- Plans for you and/or your spouse to continue working while collecting benefits.
- Your spouse's age and earnings history.
- Your other income sources.
Start by asking yourself, "Do I have enough money to meet my expenses without tapping into my retirement investment portfolio?" If your answer is no, taking Social Security benefits when you retire may be best for you. By leaving retirement-plan assets untapped, you can help them last longer.
The Social Security Administration's website, www.SSA.gov, can show you how various factors could affect your calculations.
What are some other options for receiving benefits?
Retirees who have the resources to meet basic living expenses without taking full Social Security benefits may want to consider an alternative strategy, such as file and suspend, restricted application, or reset.
For more information about these options, visit www.SSA.gov. Because they are complex, we suggest you consult with a financial advisor to discuss your specific circumstances.
Notes:
- All investments are subject to risk.
- The information is provided for educational purposes only, is not intended to be construed as legal or tax advice, and is subject to change.
- Links to SSA.gov will open a new browser window. Except where noted, Vanguard accepts no responsibility for content on third-party websites.