2 Important Things to Know About Taking Social Security at 65

Social Security benefits are earnings-based, which means that the more money you make during your career, the more you stand to collect once you file. But the age at which you first take benefits can also impact your payments. Therefore, you'll need to put some thought into when to file.

Now you actually get an eight-year window to sign up for Social Security that begins when you turn 62 and lasts until 70 (technically, you're not forced to file at 70, but there's no financial incentive to wait any longer). And since 65 falls close to the middle, you may be inclined to claim benefits at that point. But before you make that decision, you should understand what it means. Here are two important things to keep in mind if 65 is the filing age you're considering.

1. It's not your full retirement age

Many people associate age 65 with retirement because it's when you're eligible for coverage under Medicare. But don't get confused into thinking that 65 is when you're eligible to collect your Social Security benefits in full, because that's not true.

You're only entitled to your full monthly benefits once you reach full retirement age, which, for today's workers, is either 66, 67, or somewhere in between. Your exact full retirement age is dependent on your year of birth, as follows:

Year of Birth

Full Retirement Age




66 and 2 months


66 and 4 months


66 and 6 months


66 and 8 months


66 and 10 months

1960 and later


So what happens if you take benefits at 65? Essentially, you'll lose out on about 6.67% of your monthly benefit amount for each year you file prior to full retirement age. So if you were born in 1960, filing for Social Security at 65 will take about 13.34% off your benefits.

Is that the worst thing in the world? Not necessarily, especially if you need the money, and your only choice is racking up costly credit card debt instead. But if you're able to wait until full retirement age, you'll avoid a reduction completely.

2. You'll lose out on a portion of your benefits if you file at 65 and are still working

Many people who file for Social Security do so because they're out of work and need the money. But what happens if you're still working come 65 and want your benefits anyway? The short answer is that you're allowed to collect Social Security while you're working, but if you do so before reaching full retirement age, you'll lose a portion of your benefits up front.

Specifically, if you're 65 and file this year, you'll lose $1 for every $2 in earnings above the $17,040 threshold. That's because no matter what year you were born, you won't have reached full retirement age if you're talking about collecting benefits at 65.

Now the rules change a bit if you'll be hitting full retirement age at some point during 2018. If that's the case, then you can actually earn up to $45,360 without having it impact your benefits. But once your earnings exceed that limit, you'll lose $1 for every $3 in earnings until you reach full retirement age, at which point your benefits won't be withheld no matter how much you earn.

Keep in mind, however, that if you face a benefits reduction by working and collecting Social Security simultaneously, you'll essentially be reimbursed come full retirement age in the form of higher monthly payments. In other words, if you're working and receiving Social Security at age 65 this year, and your earnings exceed $17,040 by $1,000, you'll have $500 of that $1,000 withheld, but you'll get it back later on. But any reduction you face as a result of filing prior to full retirement age will remain in effect permanently, so be sure to note that distinction.

While there are benefits to filing for Social Security at 65 -- namely, getting your hands on your cash sooner -- there are also a few drawbacks to be aware of. Weigh your options carefully before making a decision to ensure that it doesn't end up hurting you.

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