Choosing when to begin your retirement benefits is an important and personal decision. It's a choice that boils down to what is best for you. The variables include health, current income and financial need. What isn't up for debate is that the age you begin receiving benefits will impact your monthly benefit.
It might be helpful to compare and contrast the impact of delaying your benefits by estimating what your Social Security benefits will be. How to Estimate Your Social Security Benefits in Six Steps can walk you through the process.
Be careful not to overlook your Medicare eligibility. If you decide to delay your benefits until after age 65, you should still apply for Medicare benefits within three months of your 65th birthday. If you wait longer, your Part B Medicare medical insurance and Part D prescription drug coverage may cost you more money. Even if you can buy employer provided insurance, you can enroll while working when you turn 65.
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How much can you increase your benefits by delaying?
You can start receiving your Social Security retirement benefits as early as age 62. However, you aren't entitled to full benefits until 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.
For every year you delay taking your Social Security benefits past full retirement age, you get a bump of 8% in your benefit until age 70. Do you have to delay for a full year for any increase, or is the 8% prorated for each month that a person delays the start of the benefit?
How long do you need to delay claiming benefits to get an increase?
You don't need to wait for a full year to get some credit. Delayed retirement credits (DRCs) are calculated for each month you wait beyond your full retirement age, which is 66 for people born from 1943 to 1954 and gradually rises to age 67 for people born after that. (Are you in that transition zone? Use our Social Security Full Retirement Age calculator to pin it down.) You'll get an extra 2/3 of 1% for each month you delay after your birthday month, adding up to 8% for each full year you wait until age 70.
When do you start earning delayed retirement credits?
The clock starts ticking the month you reach full retirement age. For example, if you were born on April 24, you'd reach your full retirement age on April 1. If you wait until May to take your benefits, you'll get 100.7% of your full retirement benefit. Wait one year and you'll get 108% of your benefit. You can earn delayed credits until age 70, when you'd receive 132% of your full retirement benefit. For example, if you'd receive $1,000 per month at your full retirement age of 66, delaying your benefits to age 70 would boost your monthly check to $1,320.
Get some help calculating your potential increased benefit
For more information and a calculator to show you how much your benefits would increase by waiting, based on your year of birth, see the Social Security Administration's Delayed Retirement Credits page. Also see Social Security's When to Start Receiving Retirement Benefits and the three factors you should consider before you take Social Security benefits.
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