If you paid into the Social Security system, you may consider when to start taking benefits, and how much benefits you will receive at each age. Generally, the decision on when to take benefits is up to you. Should you take benefits early or should you wait to take benefits when you are older?
There is no universal best month of the year to claim benefits. You can claim Social Security benefits starting from age 62, at full retirement age, or wait until age 70. Depending on your date of birth, you should expect to receive Social Security benefits on the second, third, or fourth Wednesday of the month. If you are receiving both Social Security and SSI payments, you will receive SSI payments on the first of the month while your Social Security benefit will arrive on the third of the month.
When does Social Security pay benefits?
Social Security makes payments in the month following the month when they are due. For example, Social Security payments for June are paid in July. The specific payment date depends on your date of birth. If you are receiving benefits on the record of another person such as your spouse or deceased parent, your payment date depends on that person’s birthday.
If you were born on the 1 through to the 10 of the month, you will receive a Social Security check on the second Wednesday of the month. If you were born on the 11 through to the 2 of the month, you will receive a check on the third Wednesday of the month. If you were born on the 21 through to the 31, you will receive a check on the fourth Wednesday of the month. If the payment date falls on a federal holiday, you will receive a check on the Tuesday before the initially scheduled payment date.
If you started receiving Social Security payments before May 1, 1997, you will receive benefits on the third of the month. This payment date also applies if you receive both SSI and Social Security benefits. You will receive SSI payments on the first of the month, and Social Security benefits on the third of the month. If the 1 and 3 fall on a weekend, you will receive benefits a day earlier.
When can you claim Social Security benefits?
The decision on when to start taking Social Security checks is up to you. Unlike retirement plans like 401(k) and IRA which have a required minimum distribution (RMD), Social Security does not have a mandatory age when you must claim benefits.
Here are the various ages when you can claim Social Security benefits:
Take benefits early
You can start collecting Social Security retirement benefits as early as age 62. However, you won’t get the full benefit at this age, and you will be settling for reduced benefits in perpetuity. You will only be entitled to receive the full benefit once you attain your full retirement age, which can be age 66 or 67, depending on your year of birth. If you claim benefits early, you could lose up to 30% of the benefits you are entitled to receive at the full retirement age. This means that, if your full benefit was $1000 at the full retirement age, you will receive $700 if you claim benefits at age 62.
Full retirement age
If you wait until your full retirement age, you will receive the full benefit attributable to you based on your earnings history. The full retirement age ranges between 66 and 67 and it depends on your year of birth. If you were born between 1943 to 1954, your full retirement age will be 66. If you were born in 1960 or later, your full retirement age will be 67. If you have a large amount of retirement income from other sources, you can delay taking Social Security benefits until a later age.
Delayed benefits
You can also decide to postpone taking Social Security benefits beyond the full retirement age. Typically, Social Security gives you an incentive to wait longer, and your benefits will increase by 8% annually until age 70. If your full retirement age is 66, your benefits will increase by up to 132% when you delay taking benefits until 70. However, your benefits won’t increase further if you delay taking benefits after you turn 70.
Why you should delay taking benefits
Here are some reasons you should consider waiting longer to claim Social Security benefits:
You expect to live longer
If you are in good health and believe you will live longer, you can delay taking benefits until later. Also, if you have a large amount set aside for your retirement from other sources like pension, you can choose to wait longer until 70 to start taking Social Security benefits.
You don’t want to outlive your money
If you claim benefits early, there is a risk that you could outlive your money. You could end up with reduced cash flows to meet your needs in retirement. If you think that your retirement benefits will not be enough to meet your living expenses in retirement, you can decide to continue working after retirement, and delay taking benefits until a later time.
You want to maximize your benefits
Your benefits will increase for each year you delay taking benefits after reaching the full retirement age by up to 8% each year. If your other retirement and investment product do not yield such as return, you are better off drawing from these accounts while letting your Social Security benefits continue growing. Once you reach age 70, you will receive up to 32% more benefits than if you claimed benefits at full retirement age. This means you will have more money to meet your needs as you age.
