One of the most important questions that an American worker will face once they reach the age of 62 is when is the best time to retire and begin collecting Social Security benefits.
While the economic answer is clear in terms of immediate reward, everyone has a different answer that is appropriate for their situation.
There are four main ages at which a worker typically chooses to retire, though many people simply retire at a convenient time without giving much thought to the actual age they have chosen, which can be a mistake.
The pros and cons of collecting Social Security at every age
Before even considering collecting benefits, one must first determine how many years of work they have completed. The Social Security Administration considers a worker’s highest 35 years of earnings when calculating benefits, so it is critical to have worked at least that long. Otherwise, there will be zeros in the calculation, and the amount will decrease significantly.
If you have these 35 years, you can begin planning for retirement at the age of 62, which is the earliest you can collect Social Security benefits. There is one small caveat: if you begin collecting benefits at this age, you will lose 30% of your benefit at full retirement age, which you will never recover.
Even if this appears to be a bad deal, it could be beneficial for those dealing with health issues or short life expectancies, because delaying the loss of benefits may be worthwhile in exchange for receiving payment and ceasing work.
Another popular age to retire is 65 years old. It was the original retirement age before it was raised following the 1980s Social Security collapse, and it remains the age at which a person is eligible for Medicare.
For those with higher healthcare costs, now may be a good time to retire because the loss of income is less severe (you will receive 86.7% of your benefit at full retirement age) and you will receive subsidized healthcare.
The next most popular retirement age is 67, which applies to those born in 1960 or later. If you retire at this age, you will receive 100% of your benefits, and most workers believe it is a good age to stop working because you have enough years to enjoy life and are in good health.
Of course, there is a third option that few people are aware of and that is out of reach for the majority of low-income workers unless they have no other choice, which is to delay collecting benefits until they reach the age of 70.
You can stop working at full retirement age without jeopardizing this option, but you must never begin collecting benefits in order to receive the maximum Social Security payment.
This is because the Social Security Administration increases your retirement payments by 8% for each year you delay retirement until age 70, resulting in monthly Social Security payments that are up to 124% of your retirement benefit.
Many people forego this option even if they continue to work in order to increase their payments and improve their quality of life, as Social Security is often insufficient to cover basic expenses.
Given that the average benefit in the United States for workers retiring at 70 is $1,963.48, it’s understandable that many people can’t afford to wait that long to collect their benefits.
In any case, one can retire at any time between the ages of 62 and 70, and the percentage of benefits they will collect will vary depending on the exact age, so, in case you are curious, here are all the percentages a worker can receive:
Age % of retirement benefit
62 70%
63 75%
64 80%
65 86.7%
66 93.3%
67 100%
68 108%
69 116%
70 124%
