Eligible seniors get an eight-year window to file for Social Security that begins at age 62 and ends at age 70. Right in the middle of that stretch is what's known as full retirement age, or the age at which you can start collecting the full monthly benefit your earnings history entitles you to. If you file for benefits before full retirement age, you'll reduce them (usually permanently) in the process. And if you file after that point, you'll boost them for life.
Full retirement age is based on your year of birth, as follows:
Year of Birth
Full Retirement Age
66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months
When you claim benefits at your full retirement age, whatever it happens to be, you're considered to have filed for Social Security on time. And here are three good reasons to go that route.
1. You're still working
The Social Security Administration will allow you to collect benefits while also receiving a paycheck. But if you haven't reached full retirement age, your benefits might be reduced if your earnings exceed a certain threshold that changes from year to year.
For the current year, you can earn up to $17,640 and not lose any of your benefits, but if you make more than that, you'll have $1 in benefits withheld for each $2 you earn. If you're reaching full retirement age this year, you can earn up to $46,920 without having benefits withheld. After that, you'll have $1 in Social Security withheld for every $3 you earn. If you're already at full retirement age, however, you can earn as much as you'd like and still collect your benefits in full, which is why it pays to file on time if you're still working.
2. You're low on savings
The earlier you claim Social Security, the less money you get from it. And if you're low on savings, it especially pays to wait until full retirement age to file. That way, your benefits won't be reduced, and you'll reduce your risk of falling short financially later in life.
Of course, Social Security isn't designed to sustain retirees by itself. Those benefits will usually only replace about 40% of the average earner's pre-retirement income, whereas most seniors need double that amount to live comfortably. Therefore, if you're entering retirement without much socked away in an IRA or 401(k), you can't afford any sort of reduction in Social Security, and filing on time ensures that your benefits aren't slashed.
3. Your health is good -- but not great
One interesting things about Social Security is that it's designed to pay you the same total lifetime benefit regardless of when you file. The logic is that any reduction in benefits you face by filing before full retirement age will be offset by the greater number of individual payments you collect.
That logic, however, assumes that you'll live an average life expectancy. If your health is poor, you're generally best off filing for benefits as early as you're eligible -- age 62. If your health is great, you'll usually get the most money out of Social Security by waiting to file as long as possible -- until age 70. And if your health falls somewhere in the middle -- good, but not fabulous -- full retirement age is a smart compromise.
Remember, full retirement age is dependent on your year of birth, so while it might be 66 for your neighbor, you might not get there until 67. Be mindful of this as you prepare to claim Social Security so that you don't inadvertently wind up filing for benefits early and slashing them in the process.
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