Planning for retirement is one of the most important financial decisions you’ll ever make. While many people look forward to retiring as soon as they can, choosing to start collecting Social Security too early could lead to smaller payments for the rest of your life.
In the U.S., knowing when and how to claim Social Security can help you avoid losing money and ensure a comfortable retirement. This article explains how early retirement affects your benefits and how to get the most from Social Security.
What is Early Retirement Age (ERA)?
In the United States, you can start collecting Social Security retirement benefits from the age of 62. This is known as Early Retirement Age (ERA). It sounds good—retire early and enjoy life—but there’s a catch. Taking retirement benefits before your Full Retirement Age (FRA) means you will receive less money every month.
The penalty for early retirement can reduce your monthly Social Security payment by as much as 30%. For example, if your full retirement benefit is $1,400 a month, retiring at 62 could bring it down to just $980. This reduction stays in place for life. Even when you reach 70, your check won’t go up to the full amount—it stays reduced forever.
Full Retirement Age and Delayed Benefits
Your Full Retirement Age depends on the year you were born. For most people today, it is between 66 and 67. If you wait until this age to start your Social Security benefits, you’ll receive 100% of what you’re entitled to. But there’s more good news—if you delay beyond your FRA, your benefits increase even more.
For every year you delay claiming Social Security after your FRA (up to age 70), your monthly payment goes up by about 8%. This means that if you wait until 70, you could receive up to 132% of your original benefit. That’s a big difference, especially over 10 or 20 years of retirement.
The Importance of Long-Term Planning
Planning your retirement should not be rushed. It’s not just about quitting work; it’s about securing your financial future. To make the right choice, consider your health, how long you plan to work, how much you’ve earned over your career, and how much you’ve already saved.
Social Security payments are calculated using your highest-earning 35 years of work. If you have fewer than 35 years of earnings, zeros are used in the calculation, lowering your benefit. Working a few more years—especially if you earn more now than earlier in your career—can increase your monthly checks.
How to Maximize Your Social Security Benefits
Getting the most from Social Security doesn’t need to be complicated. Here are a few simple tips to help you:
- Wait until at least your Full Retirement Age to claim benefits.
- If possible, delay until 70 to get the maximum payment.
- Make sure you work at least 35 years, and try to earn more during those years.
- Use online calculators or speak to a financial advisor to understand your options.
Remember, the longer you wait and the more you earn before retiring, the more you’ll get every month from Social Security. This extra money can make your retirement much more comfortable.