Social Security Benefits at Age 65 vs. 67: What You Need to Know
According to FinanceBuzz, Retirement is often seen as the reward for decades of hard work, and Social Security benefits can play a significant role in supporting you during your golden years. The full retirement age for Social Security in the U.S. is either 66 or 67, depending on your birth year, which allows you to claim 100% of your benefits. However, if you’re considering retiring early, here’s what you need to know about the impact of claiming Social Security at age 65 versus waiting.
Benefits at Age 65
If you opt to start collecting Social Security at age 65, your monthly benefit will be less than if you waited until your full retirement age. According to GOBankingRates, if you were born in 1960 or later and claim benefits at age 65, your monthly benefit could range from $1,544.99 to $1,653.70, depending on whether you claim right at 65 or just before turning 66.
Benefits at Age 67
Waiting until you are 67 to claim benefits entitles you to the full amount, which is currently $1,781.63, based on GOBankingRates’ analysis.
Benefits at Age 70
If you delay claiming Social Security until age 70, your monthly benefit increases further. For example, you could receive up to $2,209.68 per month if you wait until 70. After age 70, there is no additional increase for delaying benefits.
Factors to Consider
Your individual benefit amount could vary based on your specific circumstances. It’s important to weigh the pros and cons of early retirement versus waiting:
Reasons to Retire Early
- Immediate Financial Relief: Claiming Social Security early may provide financial relief and the freedom to enjoy retirement activities sooner.
- Health Benefits: Early retirement can reduce work-related stress and promote better overall health.
Risks of Retiring Early
- Reduced Monthly Benefits: Early claiming results in permanently reduced benefits, which could impact long-term financial stability.
- Longer Retirement: With increased life expectancies, your savings and Social Security benefits need to last longer. Retiring early could mean drawing on savings for a more extended period.
- Health Insurance: Retiring before Medicare eligibility at 65 could leave you without health insurance unless you extend coverage through COBRA or purchase a plan through the Affordable Care Act marketplace.
Bottom Line
Choosing to claim Social Security at 65 will result in lower monthly benefits compared to waiting until full retirement age or later. However, retiring early may be appealing for personal reasons. Balancing this decision with your financial needs and long-term goals is crucial. Supplementing Social Security with part-time work can also help maintain financial stability during retirement.
Additional Financial Tips
Regardless of your retirement plans, optimizing your finances can always help:
- Pay Off Debt: Focus on clearing debt to improve your financial well-being. Consider tools like balance transfer credit cards or debt counseling.
- Earn Extra Income: A part-time job or side hustle can provide additional financial security.
- Cut Expenses: Review and reduce major expenses, such as auto insurance and grocery bills, to maximize savings.
By planning carefully and making informed decisions, you can better manage your finances and enjoy a comfortable retirement.