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Be Wise With Money

Social Security & Retirement: What to Know Now

Plan wisely for retirement by learning how to best use this important benefit

couple meeting with financial representative


Generally speaking, you earn benefits after working and paying Social Security taxes for at least 10 years. At the time you're eligible for benefits, you don't simply get back what you paid in.

Instead, the Social Security Administration looks at your lifetime earnings and makes adjustments based on the national average wage index. Then it uses a formula to determine a benefit amount based on your highest 35 years of earnings. Higher earnings result in higher monthly benefits.

Typically, you'll begin taking your benefits at some point between ages 62 and 70:

  • 62 years old: You can begin taking benefits, but your monthly payments will be 75% of the amount they would be if you waited until full retirement age – the age at which you are eligible to receive your full monthly benefit.1
  • 65 to 67 years old: Full retirement age falls within this range and is determined by the year you were born. (See list below.)
  • 70 years old: You must begin taking benefits by this age. If you wait until age 70 to take benefits, you'll receive a higher monthly payment than you would if you started taking payments at full retirement age. 

What is full retirement age?


It depends on the year you were born.

Full retirement age by year of birth2

1943 to 1954: 66
1956: 66 and 4 months1958: 66 and 8 months
1960 and later: 67
1959: 66 and 10 months
1957: 66 and 6 months
1955: 66 and 2 months

Plan ahead for your benefits

Tom Hussian, team leader of advanced markets at Thrivent Financial, encourages people to begin thinking about when to take their benefits sometime in their 40s.

"With some planning, you get some options," he says. "Without planning, you've got to decide things in a short period of time quickly."

For example, you may decide to keep working until age 67 and then rely on savings to support you until age 70 when you begin receiving Social Security benefits. As a result, you would receive larger monthly payments. Or your spouse may opt to begin receiving benefits earlier, while you wait until age 69 or 70 – allowing your monthly benefit to grow.

Why wait to begin taking Social Security?

The later you begin taking benefits, the higher your monthly payments will be. Each year between age 62 and full retirement age, your benefits grow about 6.5%. Between full retirement age and 70, your benefits grow about 8% annually.

In other words, there's an incentive to wait if it makes sense for you financially.

Consider these factors when choosing what age to start taking benefits

  1. Savings: Determine whether you have enough money saved to cover your expenses until you begin taking Social Security benefits. If you don't have enough money saved, you may opt to take benefits earlier.
  2. Longevity: Think about your family history and your current medical situation. If you expect your retirement to last several decades, you may want to maximize your benefit and draw benefits at age 70.
  3. Marital status: If you're married and your spouse has a higher benefit than you do, you will receive the higher benefit in the event of your spouse’s death.   

The big picture

Social Security is just one piece of what retirement planners call the "three-legged stool" of retirement income:
  • Social Security
  • Savings, such as a 401(k) or IRA
  • Pension"You can't look at just Social Security to make a good decision about when to take it," says Scott Wardell, a Thrivent Financial representative in Eden Prairie, Minnesota. "You have to take a look at the rest of your retirement assets and the rest of your retirement plan."

Estimate your benefits

Want to find out what you may receive in Social Security benefits? Check out this cool tool from the Social Security Administration.

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