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Important Considerations Before You Start Receiving Payments

The decision about when to begin taking Social Security is a very personal one that varies based on each individual’s specific situation. Some people benefit more from starting as early as possible, while others are wise to delay their payments. In order to arrive at the best decision for you, it’s important to understand your options. Here, we provide an overview to help you get started.

Social Security – The basics

While you have the option to begin receiving Social Security payments as early as age 62, you will not be eligible for full retirement benefits until you reach your full retirement age (FRA), also known as normal retirement age (NRA). FRA is based on the year you were born. For every year after your FRA that you delay receiving benefits, you will receive a higher benefit amount. After age 70, the benefit increase stops, so there is no reason to delay past age 70.

The benefit you receive at FRA is known as your primary insurance amount (PIA). To understand your projected benefit amounts, create a mySocialSecurity account and use the retirement calculator to illustrate the difference in benefits if taken at age 62, FRA and age 70.

It is important to understand that if you start receiving Social Security prior to your FRA, your benefit will be less than your PIA. This is a permanent reduction. However, if you wait to begin payments until after your FRA, your benefit amount will be greater than your PIA. In other words, the amount you receive when you first start your benefits is the amount you will receive for the rest of your life.

The following table helps illustrate the effect of early versus delayed Social Security benefits:

Source: https://www.ssa.gov/OACT/ProgData/ar_drc.html

For example, if you were born in September 1969 and wish to begin receiving benefits in December 2033 (age 64 and three months), your benefit will be 81.67 percent of your PIA.