Roughly half of all Americans apply for Social Security when they turn 62, the first age retirement benefits become available. While everyone’s situation is unique, for many that might not be the optimal moment. Social Security does operate, after all, according to actuarial guidelines, so if you apply early, you will collect less in monthly benefits for a longer period of time than if you wait until your “full retirement age,” a variable based on when you were born.   

For example, individuals born from 1942 to 1954, the biggest baby boom years, have a full retirement age of 66; those born in 1967 or later can retire at age 67, while those born in the 1955 to 1966 bottleneck years reach “full retirement age” somewhere in between.

The closer someone retires to the “full retirement age” set by the Social Security Administration, the larger their monthly benefit. Indeed, those waiting until after their full retirement age to apply for benefits can even expect a credit. If one’s retirement age is 66, but one waits to age 68 to collect, one should expect 16 percent more than one would get at age 66 (a credit of 8 percent per year times two, the years delayed). After age 70, however, there is no additional benefit to waiting.

On the other hand, at 62, one could currently expect a 25 percent reduction in their monthly lifetime benefit.

But like everything, the best time to apply for Social Security benefits is not a “one size fits all” affair. Those living off their savings for lack of work, for example, might benefit by collecting early. They will collect less per month, of course, but can enjoy the benefits longer. Similarly, if one is ill and does not expect a normal life span, it would make sense to apply for benefits early. In that case, delaying benefits might actually hurt, since one could not expect to profit from the higher benefits incurred by waiting. Moreover, if at age 62 or later, illness renders one permanently disabled, one might well qualify for full retirement benefits regardless.

Those still earning, however, should probably not apply for Social Security early. In 2014, on any income of more than $15,480, such individuals could expect to pay a penalty. For each dollar earned over that sum, a figure the Social Security Administration resets periodically, the benefits would be reduced by $2. In other words, one would forfeit part of the monthly income from Social Security.

Of course, married couples with two wage earners can plan a strategy around their respective ages and relative incomes. The lower wage earner might decide to retire early and begin to collect, while the higher wage earner might choose to wait until age 66 or later. Besides for making part of the family’s Social Security benefit available sooner, should one partner die, this also enables the survivor to later collect up to 100 percent of the spouse’s benefit or their own, whichever is greater. We will further detail spousal benefits in the future.

In special situations, other factors may also come into play. If, for example, one has a child who became totally and permanently disabled before age 22, that child can also apply for benefits under the Social Security of the parent eligible for, and collecting Social Security.