Social Security is an important part of most retiree budgets. It provides an income foundation that, hopefully, will be supplemented by other sources of income, like pensions and retirement savings. However, when to start collecting Social Security is a complex choice. Here are some important things to consider as you make your decision.
The Social Security clock starts at 62
You pay into Social Security while you are working, and when you stop working, you can start collecting it. However, there are some limits. The earliest you can start collecting Social Security is age 62. However, if you do so, you will permanently reduce the amount you collect each month relative to your full retirement age. Your full retirement age will fall between 65 and 67, depending on your birth year.
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That said, if you wait until after your full retirement age, your check will be permanently increased. But the increases end when you reach 70, after which Social Security no longer offers this benefit. Of course, you don’t actually need to start collecting Social Security at all, if you don’t want to. Most people will want to collect Social Security, and here are four signs that it is time to start collecting right now.
1. You have material personal savings
Social Security is meant to be a safety net that helps to protect older Americans from poverty. The program has done an excellent job of this, but what if that’s not an issue for you? Perhaps you have been lucky enough to amass substantial retirement savings and could live off them if you needed to. In that case, you may not even need Social Security. But you may also not need to keep working, either.
In this case, starting to collect Social Security right away might give you the emotional breathing room to quit your job. That way, you could spend more time with family and friends, and do the things you want to do instead of things you feel you have to do to earn money.
2. You are burnt out
If getting up each day is a chore that seems unbearable, it might be time to stop working. Or at least to find a new job. However, many adults are in their highest earning years just before retirement, and it can be hard to call it quits. Starting Social Security if you are over 62 and need a change would allow you to continue collecting some income while figuring out your next steps.
If you go back to work and earn more than a certain amount of money ($24,480 in 2026, unless you are in your full retirement year, in which case it would be $65,160), Social Security will reduce your monthly check and add credits to your future payments when you reach full retirement age. After you reach your full retirement age, you can work without any impact on Social Security. In other words, Social Security can be a backstop for you if you just need a change but don’t know what that change is just yet.
3. Health issues make work impossible
Like it or not, we are all aging. And, sometimes, our age or other health issues make work hard, if not impossible. If you are 62 or older, starting to collect Social Security is a simple way to stop the pain of the daily grind. Social Security is meant to be a backstop, and if you are hurting, it could be exactly what you need so you can focus on healing.
4. You are 70
As noted above, Social Security benefits increase if you wait to collect them. However, Social Security stops increasing your check at age 70. You don’t have to collect Social Security at all if you don’t want to, but if your entitlement has reached its highest level, there’s no benefit in waiting to start collecting it.
Getting the timing right with Social Security
Social Security is a powerful retirement tool. Make sure you understand what the entitlement offers as you consider your own personal life situation. In the end, you may find you can start collecting sooner than you think, or you might choose to hang on for longer to ensure you receive the highest possible Social Security benefit.
