One of the most significant choices you will face during retirement is When is the appropriate time to apply for Social Security benefits? Choosing to claim your benefits early allows you to have a longer period to receive a monthly payment. On the other hand, if you wait to claim later, you will receive a higher monthly payment in the future.
Although it is commonly recommended to delay claiming Social Security benefits for as long as feasible, only a small number of retirees actually wait until they reach the age of 70, which is when monthly benefits peak. Often, those who choose to claim early have valid reasons for doing so, particularly when it comes to households with two sources of income, where the decision is not always straightforward.
Observing the choices of others can assist you in making a more informed decision regarding what is optimal for your circumstances. Below are the most commonly chosen ages for claiming retirement benefits, according to the latest information from the Social Security Administration.
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1. Age 62
Individuals can start receiving Social Security benefits at the age of 62, and approximately 23% of men and 24.5% of women choose to claim as soon as possible. This makes it the most common age for claiming benefits.
There are multiple advantages to applying for benefits at the earliest opportunity. If you require additional income to cover expenses during retirement, claiming benefits early will put you in a better financial position compared to waiting. If you have health issues that may reduce your lifespan, choosing to claim benefits early is a sensible choice. Additionally, in certain cases, it is beneficial for a spouse with lower earnings to apply for benefits at the age of 62 to optimize the total household income over their expected lifetime.
Naturally, the drawback of applying for benefits at the age of 62 is that the amount received is lower. In 2022, the typical individual who applied at age 62 received a monthly payment of $1,287.61. An increase in wages or benefits to account for the rising expenses of everyday life. In the past year and the current year combined, it amounts to $1,444.42.
The age at which a person is eligible to receive full retirement benefits.
To obtain your complete retirement benefit, you must delay receiving it until your full retirement age. the age at which a person is eligible to receive full retirement benefits In 2022, 15% of males and 13.4% of females chose to delay claiming their retirement benefits until they reached the full retirement age. Additionally, a larger number of individuals observed their benefits… financial assistance for individuals with disabilities transform into a retirement benefit once full retirement age is reached.
In 2022, a group of retirees turned 66 years and 2 months old, while some had to wait until they were 66 years and 4 months old to reach full retirement age. This discrepancy is due to a law passed by Congress in 1983, which aimed to raise the full retirement age gradually to 67. Individuals born between 1943 and 1954 reached full retirement age at 66. For those born after 1954, the full retirement age increases by 2 months each year, until it reaches 67 for those born in 1960 or later.
There are numerous advantages to applying for benefits at your full retirement age. This is the age at which you receive your complete benefits, offering a balanced approach between applying early and deferring until age 70. Additionally, this is when you will receive the maximum benefit amount. benefit for a spouse or surviving spouse There is no need to delay any further. It could be beneficial to claim your own retirement benefit when you reach full retirement age, even if you are not yet eligible for a spousal benefit, and then switch to the spousal benefit later.
Individuals who chose to wait until reaching full retirement age received a substantially higher average benefit compared to those who claimed benefits at age 62. Retirees who claimed benefits at 66 in 2022, even if it wasn’t their full retirement age, received a monthly average of $2,241.66. Accounting for the most recent two Cost of Living Adjustments (COLAs), this amount is equivalent to $2,514.66.
3. Age 65
Many Americans consider 65 as the typical age to retire, as it was the age at which they would start receiving their complete retirement benefits from Social Security when the program first started. It is also the age at which individuals qualify for retirement benefits. Medicare Medicare is a federal health insurance program for individuals aged 65 and older. When you apply for Medicare, the Social Security Administration can automatically deduct your premiums from your monthly retirement benefits. This means that some retirees may choose to apply for both Medicare and retirement benefits at the same time, typically at age 65, to simplify the process.
In 2022, 13.3% of men and 13.4% of women submitted applications for Social Security benefits between the ages of 65 and their full retirement age, making it the third most common age for applying.
As previously stated, turning 65 is mainly important because it marks the age of eligibility for Medicare. This milestone can make it more convenient for some older individuals to retire from their jobs and the health insurance provided by their employers.
Numerous individuals opt to claim Social Security benefits immediately upon leaving their job, even if it is prior to reaching full retirement age. Yet, this decision could have negative consequences, as you might face certain penalties. test to determine how much income a retiree can earn without affecting their retirement benefits In the initial year of collecting benefits, your benefit amount may be decreased if your earnings surpass a specific threshold. Therefore, if you stop receiving benefits midway through the year, you could potentially receive a lower benefit than anticipated or even owe money by the year’s end because of your income.
In 2022, the typical 65-year-old who is applying for Social Security benefits for the first time received an average monthly payment of $1,874.56. After accounting for the two most recent cost-of-living adjustments (COLAs), their monthly payment is now equivalent to $2,102.85.
At what point should you apply for Social Security benefits?
The optimal age to start receiving Social Security retirement benefits varies depending on your individual circumstances. For a single person without a spouse or ex-spouse, it is generally recommended to wait until age 70 if financially feasible.
Delaying your claim will increase the amount you receive each month. Additionally, holding off on claiming can help safeguard your savings in case you live longer than anticipated, guaranteeing financial security during your retirement years.
In 2022, a small percentage of both men (8.6%) and women (9.5%) chose to wait until they were 70 or older before claiming their benefits. This percentage has been increasing over the years, as individuals born in 1943 or later can receive an 8% increase in their benefits for each year they delay claiming until age 70. Back in 2012, only 1.4% of men and 2.2% of women waited until they were 70 or older. If it is financially feasible for you, it may be beneficial to consider joining the growing number of seniors who are delaying claiming their benefits.
