Deciding when to take Social Security benefits is tricky business. So many choices to make and decisions that once made cannot be changed. To begin making sense of the myriad of choices you have before you let’s walk through some key factors.
To be eligible for Social Security benefits upon federal retirement, you must have earned forty credits. Employees can earn up to four credits per year. Generally speaking, FERS retirees will almost always have the necessary forty credits.
Once eligible, retirees may begin receiving reduced benefits as early as age sixty-two. By waiting until Full Retirement Age (FRA), full benefits may be received. Please see the chart below to determine your FRA.
| FULL RETIREMENT AGE | |
|---|---|
| Year of Birth | Full Retirement Age |
| 1943 – 1654 | 66 |
| 1955 | 66 years and 2 months |
| 1956 | 66 years and 4 months |
| 1957 | 66 years and 6 months |
| 1958 | 66 years and 8 months |
| 1959 | 66 years and 10 months |
| 1960 and later | 67 years |
Factors that Affect Your Social Security Benefit
The amount of your Social Security benefit will depend on two factors: how much you’ve earned throughout your working career and the age at which you apply for benefits. The highest thirty-five years of earnings are used to compute your full benefit. If you have not worked thirty-five years by the time you retire, there will be zeros in your average earnings.
You must wait until your full retirement age (FRA) in order to receive your full Social Security benefit. The Early Retirement Benefits chart illustrates what percentage of benefit you can receive if you decide to draw Social Security before your full retirement age.
| EARLY RETIREMENT BENEFITS | ||
|---|---|---|
| Age of Application | Benefit if FRA=66 | Benefit if FRA=67 |
| 62 | 75% | 70% |
| 63 | 80% | 75% |
| 64 | 86.7% | 80% |
| 65 | 93.3% | 86.7% |
| 66 | 100% | 93.3% |
| 67 | Not Applicable | 100% |
In addition to the option of drawing your Social Security benefit early, you have the choice to delay the receipt of your benefit. If you delay your benefit, it increases every year until age seventy, which is the latest you would want to delay taking your Social Security benefit. The Delayed Retirement Benefits chart below illustrates how waiting to retire can increase your Social Security benefit by a defined percentage.
| DELAYED RETIREMENT BENEFITS | ||
|---|---|---|
| Age of Application | Benefit if FRA=66 | Benefit if FRA=67 |
| 66 | 100% | Not Applicable |
| 67 | 108% | 100% |
| 68 | 116% | 108% |
| 69 | 124% | 116% |
| 70 | 132% | 124% |
Case Study
You have reached age 62 or are approaching this stage in life where it’s time to make a decision. What is the best age to turn on your Social Security benefit? Let’s examine the following example of drawing your Social Security benefit before and after FRA.
At age 62, you may begin drawing Social Security, but it will be reduced by 25% assuming your FRA is age 66. You could potentially end up with 32% more added to your benefit if you wait until age 70 to draw. Remember, as you decide when to draw Social Security if you are a FERS federal employee, your Special Retirement Supplement (SRS) will end at age 62. For some, that means you may need to draw Social Security at age 62 and will not have the potential to delay that benefit.
The big question is – How long will you live after age 70? An even bigger question — What about you and your spouse? Will one of you live substantially longer than the other to receive more benefit from the system?
Now that you know more about how your Social Security benefit is calculated at various ages, you need to be aware of the potential reductions that may affect you. For further information, visit our blog 6 Social Security Changes in 2019.
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