Patience can pay off.
When should you file for Social Security? That's the question many Americans really begin to seriously consider as they approach their early 60s.
Nearly one in three Americans begin receiving Social Security benefits at age 62. More than half of Americans file for Social Security before their full retirement age.
In some cases, those are the best strategies -- but not always. Here are three no-brainer reasons to claim Social Security at age 67.
Image source: Getty Images.
1. Make more money working
Arguably the best reason to wait until age 67 to receive Social Security benefits is that you'll probably be able to make more money working. After all, the average Social Security monthly retirement benefit of $1,837 is well below the average monthly income of $4,621.
Sure, you could file for Social Security benefits before you reach 67 and continue to work. However, keep in mind that your benefits could be reduced significantly.
The Social Security Administration (SSA) will deduct $1 in benefits for every $2 you earn above an annual limit. That limit is $21,240 in 2023. In the year you reach your full retirement age (which is 67 for anyone born in 1960 or later), your benefits will be reduced by $1 for every $2 you make above the limit.
When you reach your full retirement age, you'll begin to be credited for all of the benefits that were withheld. However, waiting to file for Social Security could be more advantageous for many Americans.
2. Higher Social Security benefits
That leads us to the second major reason why holding off until age 67 to collect Social Security benefits makes sense: Your monthly benefit will be higher.
SSA will reduce your Social Security benefit by five-ninths of 1% per month for early retirement up to 36 months before your full retirement age. If you begin collecting benefits sooner than that, the amount you receive will be reduced by five-twelfths of 1% per month.
For example, let's suppose your full retirement age is 67 and you decided to retire at 62. Your monthly Social Security benefit will be reduced by 30% (36 months times five-ninths of 1% plus 24 months times five-twelfths of 1%).
3. More time to save for retirement
There's another no-brainer reason to wait until age 67 to begin receiving Social Security benefits that some people might not think about. It gives you more time to save for retirement.
Social Security was designed to provide only around 40% of your pre-retirement income. You'll almost certainly need other sources of income during your retirement years.
Pushing back your retirement until age 67 will allow you to sock away more money into your 401(k), IRA, or other retirement accounts. It also could help the money you've already invested grow even more. You should consider consulting with a financial advisor the closer you get to retirement to determine the best ways to invest your retirement funds.
Another alternative
If you really want to maximize your Social Security benefits, you can delay retirement even longer. You could wait until you reach age 70 to begin collecting your Social Security check. This approach will boost your monthly benefit by 24%.
There is a potential downside to holding off, though. If you don't live long enough, your cumulative lifetime Social Security benefits could be less than if you had begun receiving benefits earlier.
FAQs
If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.
Should I collect SS at 67? ›
If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age.
What does Suze Orman say about when to take Social Security? ›
The Importance of Planning Ahead
“This is not a decision you can just shelve until you are 61,” Orman wrote. “If you haven't made plans to delay claiming your Social Security at that point, chances are you will just go ahead and start at 62. It takes planning to be able to delay starting to collect your benefit.
What does Dave Ramsey say about taking Social Security at 62? ›
Here's when Ramsey said you can claim Social Security at 62
The question focused on whether to start retirement benefits at 62 or wait until full retirement age. In response, Ramsey said that "it usually makes sense to take it early if you're going to ... invest every bit of it."
Is it wise to retire at 67? ›
The normal retirement age is typically 65 or 66 for most people; this is when you can begin drawing your full Social Security retirement benefit. It could make sense to retire earlier or later, however, depending on your financial situation, needs and goals.
What is the average Social Security check at age 67? ›
According to the SSA's Office of the Actuary, retired-worker beneficiaries who were 62 years old in December 2023 received an average check of $1,298.26. As for 67-year-old retired-worker beneficiaries, the average payout was a more robust $1,883.50.
What is the maximum income for Social Security at 67? ›
Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits.
What is the Social Security 3 year rule? ›
The rules are as follows: Before age 24 - You may be eligible if you have 6 credits earned in the 3-year period ending when your disability starts. Age 24 to 31 – In general, you may be eligible if you have credit for working half the time between age 21 and the time your disability began.
What's the best age to start getting Social Security payouts? ›
You can start your retirement benefit at any point from age 62 up until age 70. Your benefit will be higher the longer you delay your start date. This adjustment is usually permanent. It sets the base for the benefits you'll get for the rest of your life.
What documents does Suze Orman recommend? ›
4 Documents Suze Orman Says You Need
- Will. A will is a legal document that, among other things, outlines where you want your assets to go after you die. ...
- Living Revocable Trust. ...
- Durable Power of Attorney for Healthcare. ...
- Advance Directive.
Start Collecting Early
invest every bit of it,” Ramsey said in a 2019 podcast. Ramsey was responding to a question from a listener about whether it made more sense to collect Social Security at 62 or wait until full retirement age, which is either 66 or 67 years old, depending on your birth year.
Who is the best expert on Social Security? ›
Mary Beth Franklin is one of the country's leading experts on Social Security. In fact, she has been called the “Google of Social Security." With more than 2,700 rules that determine the amount of Social Security benefits, it can become complicated.
What is the #1 reason to take Social Security at 62? ›
1. You're Planning Your End-of-Life Care. Your Social Security benefits stop paying at your death, so if you die before collecting benefits, you'll have missed out on benefits entirely.
Why you should take Social Security at 67? ›
If you are working and haven't reached full retirement age, the Social Security Administration reduces your benefits if your annual earnings from work exceed a certain limit. The limit is $22,320 in 2024. If you wait until you reach age 67, then that limit no longer applies.
Are they raising the retirement age to 67? ›
In 1983, Congress increased the full retirement age (FRA) from 65 to 67, a change phased in over the course of 33 years. This phase-in just ended, with the FRA now static at age 67 for individuals reaching age 62 in 2022 or later.
What if my retirement age is 67? ›
If you start receiving benefits at age 67 you get 100 percent of your monthly benefit. If you delay receiving retirement benefits until after your full retirement age, your monthly benefit continues to increase.
How much is Social Security taxed at age 67? ›
The amount taxed on your Social Security benefits depends on the additional income you bring in. The tax varies from 0% to 85% of your benefits.
How much Social Security do you lose if you retire at 65 instead of 67? ›
How Your Social Security Benefit Is Reduced
| If you start getting benefits at age * | And you are the: Wage Earner, the Retirement Benefit you will receive is reduced to | And you are the: Spouse, the Retirement Benefit you will receive is reduced to |
|---|
| 65 | 86.7 | 41.7 |
| 65 + 1 month | 87.2 | 42.0 |
| 65 + 2 months | 87.8 | 42.4 |
| 65 + 3 months | 88.3 | 42.7 |
58 more rowsIf you start receiving retirement benefits at age: 67, you'll get 106.7 percent of the monthly benefit because you delayed getting benefits for 10 months. 70, you'll get 130.7 percent of the monthly benefit because you delayed getting benefits for 46 months.
