Do You Have to File for Social Security at Full Retirement Age?

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Millions of seniors today collect Social Security, and the program serves as a lifeline for those who enter retirement without personal savings. Now when we talk about Social Security, you'll often hear the term "full retirement age" thrown around, since that's the age you're entitled to your full monthly benefits based on your earnings history. That age is a function of your year of birth, as per the following table:

Year of Birth

Full Retirement Age

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

67

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The question is: Is filing at full retirement age your only option for claiming retirement benefits?

You have choices

The Social Security Administration (SSA) won't force you to wait until your full retirement age to collect the retirement benefits you've worked for. In fact, you're allowed to claim benefits as early as age 62. Doing so, however, will cause your benefits to get reduced by the following percentages:

  • 6.7% a year for the first three years you file early
  • 5% a year for each year you file early beyond three years

This means that if you were born in 1961 and therefore have a full retirement age of 67, filing at 62 will reduce your benefits by 30%. That reduction will then remain in effect for the rest of your life unless you manage to withdraw your benefits application within a year, and also repay all of the money you collected back to the SSA.

Now the SSA will also allow you to delay retirement benefits past your full retirement age. In doing so, you'll get the opportunity to boost them by 8% a year up until you turn 70, at which point that incentive runs out. If your full retirement age is 67 and you wait until 70 to file, you'll snag a 24% increase, which will remain in effect for as long as you collect Social Security.

When should you claim benefits?

The decision to file for benefits could ultimately boil down to a number of factors, so ask yourself these questions to land on the right age:

  • Do I still have an income from work? If so, it pays to delay retirement benefits until at least full retirement age, because if you work and collect Social Security at the same time, you'll have a portion of your benefits withheld if you earn too much. Plus, it doesn't pay to slash your benefits when you still have a paycheck.
  • Have I saved well for retirement? If you haven't, then it probably pays to grow your benefits as much as you can by filing at age 70, especially if you think they'll ultimately constitute your largest source of income in retirement.
  • Is my health in decent shape? Social Security is technically designed to pay you the same total lifetime benefit regardless of when you initially file. The logic is that filing early reduces your monthly benefit amount, but you collect more payments, and delaying benefits has the opposite effect so that either way, things even out. That formula assumes that you'll live an average life expectancy, though. If your health is poor and you're likely to die young, it usually makes sense to file for benefits earlier. And if your health is fantastic, it generally makes sense to delay benefits as long as possible.

Though it's important to know your full retirement age, and there are plenty of good reasons to file at that point, when it comes to Social Security, you do have choices. The key is to understand the ramifications of filing at different ages to land on the best decision for you.

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