Social Security Myth #1: You must claim your benefits at age 62
Some people think you’re required to claim your Social Security benefits at age 62. That’s a misconception: 62 is the earliest age you can start claiming your benefit, but in fact, it’s not the only age to do so.
Your base Social Security benefit is calculated based on your “full retirement age”, also known as FRA, and your FRA is determined according to your date of birth. Basically, the Social Security Administration (SSA) is the one that calculates your base benefit based on your earnings history, taking into account your highest 35 years of earnings. This obviously includes only the years in which you paid Social Security taxes.
Pro Tip: You can find your FRA by heading over to Social Security’s website. You can also find this information on a paper statement sent to you by the SSA. But if you were born in 1960 or later, your FRA is right here: 67.
Now that we’ve debunked this Social Security myth, you should also know some other important things. If you claim your benefits anytime before your full retirement age, your amount will be lower compared to what you’d receive if you were to wait until FRA.
In other words, getting your retirement benefits at 62 translated to a 30% lower monthly income than your FRA benefit (assuming you were born in 1960 or later and have an FRA of 67). This means that your retirement income may be significantly reduced for several decades.
A key aspect to take into account when claiming your Social Security benefits is boosting your income for your golden years, which could last longer than you’d expect.
Wait until age 70 to start claiming Social Security benefits, and you will increase your retirement income:
- Delay claiming Social Security until age 62 and lock in a “bonus”: about 8% extra monthly income for each year you wait to claim (up to age 70).
- If your full retirement age is 67, you can increase your monthly income by 24% by waiting from 67 to 70.
- If your full retirement age is 67, you can increase your monthly income by about 77% by waiting from 62 to 70.
