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Every worker at some point starts to think about retirement and applying for Social Security benefits.

The big question is: When should you start collecting Social Security?

Generally, the key to that answer lies in what is considered your “full retirement age” because that is the age at which you can collect your full benefit.

But the answer is not the same for everyone.

Deciding when to start collecting Social Security is a personal decision that should be based on your individual and family circumstances.

It used to be that you could retire “early” by collecting reduced benefits starting at age 62 or you could wait until you were 65. But now, depending on the year you were born, you will not reach full retirement age until between 65 and 67.

What is the full retirement age in 2019?

Today, full retirement age is 67 for those born in 1960 or later. If you were born in 1937 or earlier, your full retirement age is 65. The FRA rises two months every year after that until it caps out at age 67.

You even have the option of delaying your benefits past your full retirement age, thereby locking in an even higher monthly check. If you plan to work during retirement, you may want to delay collecting Social Security because your earnings could have a negative effect on your benefits.

However, there are also instances where taking benefits before you reach full retirement age most likely will pay off.

If you start collecting at the earliest opportunity, which is age 62, you’ll receive a permanently reduced benefit, but you could make out better overall if you live long enough to offset the reduction.

If you wait until your full retirement age, you can collect 100 percent of your benefit.

Here’s what to consider to determine when you should start collecting Social Security benefits.

When should I start collecting Social Security benefits?

Optimum strategy: put it off. Generally, it’s best to postpone Social Security benefits at least until you reach full retirement age, which is determined by the Social Security Administration.

Collecting Social Security early will cost you

If your full retirement age is 67, your Social Security benefit is reduced by:

  • About 30 percent if you start collecting at 62.
  • About 25 percent if you start collecting at 63.
  • About 20 percent if you start collecting at 64.
  • About 13.3 percent if you start collecting at 65.
  • About 6.7 percent if you start collecting at 66.

Source: Social Security Administration

“Social Security is like longevity insurance,” says Brent Neiser, a certified financial planner and senior director at the National Endowment for Financial Education. “It’s a stream of payments that will not stop throughout your life, so delaying your benefits to keep those payments as large as possible forms a helpful base to your retirement plan.”

Neiser urges those who have not saved enough for retirement to use whatever means possible to postpone their Social Security benefits until after their full retirement age to help boost their future income.

For example, if your full retirement age is 66, but you delay getting Social Security until 67, you’ll receive 108 percent of your monthly benefit. If you wait until age 70, it jumps to 132 percent.

“You can use personal savings to help bridge the gap, but ideally you should plan to work a little longer (and delay Social Security),” Neiser says.

Use Bankrate’s retirement income calculator to figure out how much monthly income your savings will provide you.

Another benefit of working longer? Medicare. Aging Americans become eligible for federal health insurance coverage at age 65.

“If you stop working at age 62 and lose health insurance, you have to get supplemental insurance to bridge the gap until you turn 65 and Medicare kicks in,” Neiser says.

If you plan to work during retirement, you have another incentive to delay collecting Social Security. Earning too much at a job after you begin collecting Social Security can negatively affect your benefit.

If you are under full retirement age for the entire year, the government deducts $1 from your benefit payment for every $2 you earn above the annual earnings limit. For 2019, the earnings limit is $17,640.

In the year you reach full retirement age, your benefit is reduced by $1 for every $3 you earn above $46,920 (in 2019) until the month you reach full retirement age.

You will also owe Social Security and Medicare tax on your earnings, even if you are already receiving benefits.

Early benefits can pay off

There are instances where taking early benefits pays off despite the reduced monthly check, Neiser says.

“No one can predict how long you’ll live, but if you’re facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate,” he says.

Just be sure you budget for a reduced benefit.

If your full retirement age is 67 and you begin collecting Social Security at age 62, for example, your benefits are reduced by about 30 percent.

The reduction drops to 25 percent if you wait until you’re 63, and so on. The Social Security Administration provides a chart of retirement benefits by birth year.

Married women are also good candidates for claiming early benefits because they are likely to outlive their husbands. Those widows then become eligible to receive the greater of either their benefit or their late husband’s benefit.

However, this scenario is valid only if the husband does not claim his benefits early. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives.

Calculate how filing early will affect your spousal benefit here.

What’s your break-even?

Calculate your break-even age to better determine when you should start drawing Social Security.

Your break-even age occurs when the total value of higher benefits (from postponing retirement) starts to exceed the total value of lower benefits (from choosing early retirement).

Here’s an example: If you are eligible to collect a reduced $900 benefit at age 62 plus 1 month, and your benefit would increase to $1,251 at age 65 and 10 months, your estimated break-even age is 75 years and 5 months.

If you expect to live beyond that age, it would be financially worth your while to delay drawing benefits. Check out the Social Security Administration’s life expectancy calculator to help you decide.

When it comes to calculating a start date for Social Security benefits, however, there’s not an age that’s appropriate for everyone. Consider your own financial need, health and post-retirement plans before making the call.

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