Before making any decisions about when to apply for Social Security retirement benefits in the United States, it is important to keep in mind that each case is unique and individual. Personal circumstances, such as past earnings, health status and plans for retirement, are factors that will influence the amount of money you get. However, it is essential to understand how the years of application can directly affect the final benefit amount.
First, your retirement age has a significant impact on the amount of money you will get from Social Security. If you decide to retire at age 62, you will get 30% less than you would if you waited until age 67. This is due to the penalty for early application. If you wait until age 70, however, you can get a higher benefit than you would at 67, thanks to the bonus arrangements that apply when you delay retirement.
What happens if you retire at 62?
If you decide to claim your retirement benefit at age 62, you will get only 70% of the full amount you would have received if you had waited until age 67. This means that a person who is entitled to receive $2,000 a month if they wait until age 67 would only get $1,400 if they retire at age 62.
Choosing to retire at age 62 is one of the most common decisions among United States workers, as it marks the beginning of the minimum age for claiming Social Security benefits. However, doing so at 62 means that you will get 30% less in benefits than you would if you waited until age 67.
This may seem attractive to those who need the immediate income, but it is crucial to understand that this discount is permanent. This means that, throughout retirement, you will get a lower amount each month, which can significantly affect your long-term savings. Also, if you retire at age 62, the payments are adjusted by the rate of inflation, but the amount will always be lower than if you had waited.
Maximum payments at different ages
The maximum Social Security payments depend on several factors, including average earnings over a person’s working life. Here’s how payments vary depending on the age at which you apply for retirement:
- At age 62: By choosing to retire at age 62, payments are reduced by about 30%. You would get $2,710 at this age.
- At age 67 (full retirement age): The 100% benefit amount you get if you retire at age 67, in the case of a standard retirement. The annual maximum in 2024 is $3,822.
- At age 70: If you decide to wait until age 70, payments increase by an additional 8% for each year after age 67. This could bring the maximum annual payment to $4,873, which is a significant increase.
These amounts will increase in the year 2025 due to the COLA, so we will have new maximum checks that could even reach $5,180 per month in the most extreme case.
Requirements and options for maximising payments
The key to getting as much Social Security as possible depends on strategically planning when to apply for benefits. While waiting until age 70 is one of the best options for maximising your benefit, it is also important to work longer and have higher wages throughout your career.
- Work for at least 35 years: Social Security payments are calculated taking into account the 35 years with the highest earnings. This ensures that you get as much as possible.
- Delay retirement until age 70: As mentioned above, this is the best time to maximise your benefit, as payments increase by 8% for each year after age 67 until age 70.
- Have a high salary. In addition to that, during your working years it is important to have the highest salary possible. If we do not have a high salary we may not have a good retirement benefit in the future.
Social Security is a crucial part of retirement for millions of people in the United States, and understanding how different retirement timing impacts payments is essential to making informed decisions.
However, the final decision is entirely individual, as is the month-to-month payment we get from Social Security. Either way, we need to look at our circumstances and our context to determine which option is best for us.