If you take early Social Security, you start collecting retirement benefits before you reach full retirement age. That's age 66 or 67, depending on the year you were born.

You can start to collect Social Security retirement benefits as early as age 62, but your monthly check will be lower than if you wait until your full retirement age. You get the largest benefit if you wait until age 70 to collect. Still, there are several situations when taking Social Social early makes sense—even if it means a smaller check.

Key Takeaways

  • Americans have some discretion in when to start taking Social Security benefits - either before or after full retirement age.
  • If you're in poor health, it might be better to start collecting your benefits sooner rather than later, but taking benefits earlier reduces your monthly amount.
  • Your benefit increases by 8% each year you wait to collect past your full retirement age, up to age 70. Savvy investors may be able to beat that.
  • If you need more money now and expect your expenses to go down later, it might make sense to start benefits early.

Social Security Retirement Age

Full retirement age is when you first become eligible for full (not reduced) Social Security retirement benefits. If you were born in 1960 or later, your full retirement age is 67. If you were born before that, the age is somewhere between 65 and 66 years and 10 months, depending on your birth year.

No matter what your full retirement is, you can start collecting benefits as early as age 62 or as late as age 70. Your birth year and your age when you start to collect benefits affect your monthly benefit amount:

Social Security Benefits by Age and Year of Birth

Year of Birth

Full Retirement Age

Reduction at Age 62

1937 or earlier

65

20%

1938

65 and 2 months

20.83%

1939

65 and 4 months

21.67%

1940

65 and 6 months

22.50%

1941

65 and 8 months

23.33%

1942

65 and 10 months

24.17%

1943–1954

66

25.00%

1955

66 and 2 months

25.83%

1956

66 and 4 months

26.67%

1957

66 and 6 months

27.50%

1958

66 and 8 months

28.33%

1959

66 and 10 months

29.17%

1960 and later

67

30.00%
Source: SSA

You can earn delayed retirement credits each month that you wait to collect beyond your full retirement age, up until age 70. This increases your monthly payment by 2/3 of 1% for each month that you wait—or 8% a year.

8%

The increase in Social Security benefits you'll realize each year you delay beyond your full retirement age, up until age 70.

Even though more money is usually better, that's not always the case with collecting Social Security benefits. Here are four times it might be better to forgo the larger check and start collecting benefits sooner.

1. Your Health Is Failing

Retirement can last 20 or 30 years (or more) if you're a healthy senior, but unfortunately, many people develop illnesses as they age. That's why planning for healthcare costs in retirement is so important.

If you're in poor health, you may need the extra money that Social Security benefits provide—and opt to claim benefits early. And, sadly, if you think you may not live to be very old, you could come out ahead on a lifetime basis.

Still, this strategy could backfire if you have a spouse. If you start collecting early, it will lower your monthly benefit. But it will also lower any survivor benefits your spouse is entitled to after you pass. If your spouse outlives you for many years, this could be a serious financial hit.

2. You Think You Can Get a Better Return

You'll get an 8% increase in your benefit each year past your full retirement age, up until you reach age 70. That means if you're 67 and wait three years to claim benefits, your check will be 24% larger when you finally start.

But if you're a savvy investor, it might make sense to start collecting those benefits sooner rather than later. Why? You could collect your Social Security benefits early, invest the money, and beat that 8% annual return.

Of course, there are risks associated with this strategy. Unless you have a crystal ball, you have no idea how the markets will perform. One bad year could wipe out any gains, as well as your initial investment.

3. You Need More Money in the Early Retirement Years

In the first stage of retirement, many people are healthy, have a lot of energy, and spend more money on hobbies, travel, and other entertainment. As a result, many newbie retirees need increased cash flow during the earlier years of retirement—and less as they get older.

If you fall into this category and want to boost your cash flow now, early Social Security benefits could help. Sure, you'll have a lower payout than if you waited. But if enjoying your retirement while you're still healthy is more important than collecting a larger Social Security check later, it makes sense to start early.

4. You're Afraid Social Security Will End

Social Security is one of those benefits that's supposed to be around forever. But the system is in trouble, and benefits may change in the future. That worries people of all ages.

While older people—particularly ones in or nearing retirement age—worry about the fate of Social Security, they likely won’t see much impact. Still, if the thought of losing out on Social Security benefits is keeping you up at night, it may be better to start claiming early or at full retirement age rather than to hold off for an increased benefit.

The Bottom Line

When to start collecting Social Security depends on each retiree's unique situation. The longer you wait to start collecting, the larger your monthly check will be. But that doesn't automatically mean you'll have the highest lifetime benefits.

If your health is failing, if you need more cash in the early years of retirement, or if you are worried that Social Security will go away, claiming early or at your full retirement age may make sense. If you're not sure which Social Security claiming strategy to use, it can be helpful to work with a trusted financial planner.