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 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.
Why should you 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.
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 is the $16728 Social Security bonus most retirees completely overlook? ›
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
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 smartest age to collect Social Security? ›
You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase.
What is the 10 year rule for Social Security? ›
If you've worked and paid Social Security taxes for 10 years or more, you'll get a monthly benefit based on that work.
What is the Social Security bonus trick? ›
Social Security doesn't randomly award money to people. And there's no way to legally trick Social Security into giving you more money. Instead, Social Security benefits are paid out according to a specific formula used by the Social Security Administration, which is based on your lifetime earnings.
When my husband dies, do I get his Social Security and mine? ›
In many cases, a surviving spouse can begin receiving 1 benefit at a reduced rate and allow the other benefit amount to increase. If you will also receive a pension based on work not covered by Social Security, such as government or foreign work, your Social Security benefits as a survivor may be affected.
The reforms to Social Security put in place in 1982 provided for a gradual increase in the normal retirement age from 65, for people turning 62 before 2002, to 67 for people turning 62 after 2022.
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."
What is the average retirement income at age 67? ›
According to the latest data from the United States Census Bureau, the median annual income for individuals aged 65 and older is $47,620, while the mean annual income is $75,254.
What is the current maximum Social Security benefit at age 67? ›
Key points. The maximum monthly Social Security benefit in 2024 is $3,822 for someone who retires at 67. The average monthly Social Security benefit is $1,837. Several factors, including your earnings during your working years and your age, determine Social Security benefits.
At what age is Social Security no longer taxed? ›
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
What is the #1 reason to take Social Security at 62? ›
You need cash now. With the rising cost of living, you may decide to claim your Social Security benefits early. From 2008 to 2009, nearly 36% of eligible men and 39% of eligible women started claiming benefits at age 62 for one simple reason — to pay the bills.
