Retirement Planning: When Should You Apply for Social Security Benefits?

Everyone’s plans and decisions are different, and each person prioritizes unique variables and considerations. This also applies to considering when you should apply for Social Security. Like many parts of financial and retirement planning, there is no “one size fits all” solution that will meet everyone’s needs.

You are legally able to apply for benefits as early as age 62 as a primary beneficiary, but it is important to remember that there are other paths you can take. This article will walk you through some of the different questions and decisions you may encounter, which should give you the information you need to make the choice that best fits your and your family’s needs.

What is full retirement age?

The first question that many have surrounding Social Security is when they can actually apply for benefits. As mentioned above, this can be an “it depends” situation.

According to the Social Security Administration, the “normal retirement age,” also known as full retirement, depends on your birth year. When you reach that age, you are eligible to receive your full retirement benefits for which you qualify.

Under current law, if you were born in or after 1951, your full retirement age is some point between age 65 and age 67. If you were born before 1951, you’ve already reached full retirement age.

What about applying for benefits early?

You have likely heard about the ability to apply for benefits early.

In fact, you can apply to begin to receive your Social Security benefits up to 36 months before your normal retirement age—or, in some cases, even earlier. However, it is important to understand that this decision comes with some implications to the amount of money you receive.

For each early month that you elect to begin receiving your Social Security benefit, the total amount is reduced by five-ninths of 1 percent. If you choose to apply even earlier than three years in advance of your retirement age, your benefit is further reduced by five-twelfths of 1 percent per month for the rest of your retirement.

As an example of how this could work, if you apply for benefits at 62, and your normal retirement age according to the Social Security Administration is 66, you could lose about 25 percent of your total potential benefits.

What if I wait to apply for benefits later?

In contrast to the above scenario, if you choose to retire sometime after your full retirement age but before 70 years old (which is the age at which you begin to receive benefits automatically), you can earn what is called a “delayed retirement" credit.

This credit varies depending on how long you delay your retirement beyond your normal retirement age, but the higher benefits baseline it creates lasts for the rest of your retirement.

What else should I consider when making a decision?

As if the above questions were not enough, there are still more considerations that need to be taken into account. And, similar to the other questions, the answers to these will also be unique to your family and financial situation.

These questions include:

• How much retirement income do you need, and how much are you projected to have from your non-Social Security sources?
• What do you anticipate your long-term care needs will be?
• Do you need to consider spousal benefits, where a portion of your benefits are left to the surviving spouse?
• What is your ability to keep working beyond the normal retirement age?

Get advice that makes a difference.

If you have a choice and are able to wait to apply to begin receiving your Social Security benefits, waiting as long as you can (up to age 70) can pay off in the long run. However, it is important to review your options with your family and a trusted professional to fully understand the pros and cons of each choice.

If you are interested in learning more about how you can prepare yourself for retirement, we would love to speak with you. Contact the team at Harvest Wealth Group, and take a moment to download our free resource, Creating a Personal Financial Plan to Help You Reach Your Money and Life Goals.