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If you're single, waiting to collect can pay off

Social Security offers guaranteed increases—the longer you wait, the more you'll earn.

POINTS TO KNOW

  • The longer you wait to start collecting Social Security, the more you'll collect each month.
  • Several factors could reduce your Social Security payments: working while you collect benefits before your full retirement age, paying federal (and possibly state) taxes, having Medicare premiums deducted, and receiving a government pension.

Start with your benefits estimates

Your first step in maximizing your Social Security benefits should be to visit the Social Security Administration (SSA) website.

Factors that could reduce your payments

Before you plug your Social Security estimates into your retirement plan, be sure to adjust those estimates if any of these factors apply to see how much you might actually end up with.

Figure out the best time to claim Social Security

As you consider the right time to start collecting Social Security, remember that if you decide to delay, you can revisit that decision as often as you'd like.

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Claim early at age 62

Anyone who's paid Social Security taxes for at least 10 years can start to receive retirement benefits as early as age 62 based on his or her earnings record.

Collecting Social Security at 62 has some advantages. For example, you may be ready to retire and counting on Social Security as the cornerstone of your retirement plan. After all, if you've paid Social Security taxes for 10 years, then you're entitled to Social Security benefits.

If you have serious health problems or a family history that suggests you may not live long enough to profit from waiting, collecting early might make the most sense for you.

On the other hand, the earlier you start to collect, the less you'll receive each month. But if you start to collect and then change your mind, you have 2 options.

The "reset" rule

Within 12 months of starting to collect, you can "reset" your benefits to erase the reduction, but you must repay all of the benefits you and your family earned.

See how it works: The "reset" rule

The voluntary suspension rule

If you started collecting before your full retirement age (FRA), you can suspend your benefits at FRA and restart them later.

See how it works: Voluntary suspension

Claim at full retirement age

If you start collecting Social Security retirement benefits at your full retirement age (FRA), you'll receive 100% of your primary insurance amount (PIA). But remember that you can collect more than 100% of your PIA by waiting beyond your FRA.

Each month that you delay your Social Security benefits past your FRA, you'll earn an extra 0.67%. That's an extra 8% for each year that you wait past FRA … and what other investment can guarantee an 8% annual increase?*

Wait until age 70 to claim benefits

If you can wait until you're 70, you'll receive your highest Social Security payments—up to 132% of your primary insurance amount (PIA) if your full retirement age (FRA) is 66, or 124% of your PIA if your FRA is 67.

Claim anytime in between

Of course, you don't have to file when you reach one of the milestones listed above—62, full retirement age (FRA), or 70. You can apply for Social Security retirement benefits anytime between the ages of 62 and 70.

What's next?

Social Security provides more than just retirement benefits. And the federal government offers more than just Social Security benefits. As you put your retirement plan together, check to see whether you qualify for other government benefits, such as family and children services, tax assistance, and active military or veterans benefits.

Apply for Social Security

You can file for Social Security benefits online, over the phone, or in person at a local Social Security Administration office.

You may need to produce these documents when you apply

  • Your Social Security card.
  • An original birth certificate or other proof of your birth.
  • A copy of your W-2 form or self-employment tax return for the previous year.
  • If you weren't born in the United States, proof of U.S. citizenship or lawful alien status.

A Vanguard advisor can help

If you're struggling with making your best Social Security decision, we can help. You'll also get a custom financial plan, ongoing portfolio management, investment coaching, and real-time goal tracking—all at a low cost.

Your Social Security guide


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REFERENCE CONTENT

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Full retirement age (FRA)

The age at which you're eligible for your full monthly benefits, also known as the primary insurance amount (PIA). The Social Security Administration sometimes refers to full retirement age as "normal retirement age" (NRA).

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Earnings record

The history of your earnings for the years you worked.

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Full retirement age (FRA)

The age at which you're eligible for your full monthly benefits, also known as the primary insurance amount (PIA). The Social Security Administration sometimes refers to full retirement age as "normal retirement age" (NRA).

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Voluntary suspension

Cheryl, age 61, is starting to look at her Social Security options.

  • If she claims early, at age 62, her benefits would be reduced by 25% to $750 a month.
  • If she claims her benefits at her full retirement age (FRA) of 66, she'll be due $1,000 a month.
  • If she waits until age 70 to claim, that number would rise 32% to $1,320 a month (in real, inflation-adjusted terms).

Now, if Cheryl claims early (the "start"), she can voluntarily suspend her benefits at age 66 (the "stop").

Then when she resumes her benefits at age 70 (the second "start"), that $750 she had been receiving before she suspended her benefits would rise by 32% to $990 a month. That payment is significantly higher than $750, but it's far lower than the $1,320 she'd receive if she waited until age 70 to claim benefits initially.*


*Sources: Vanguard calculations, based on data from Society of Actuaries, 2014, RP-2014 Mortality Tables Report (Schaumberg, Ill.: Society of Actuaries), and Society of Actuaries, 2014, Mortality Improvement Scale MP-2014 Report (Schaumberg, Ill.: Society of Actuaries).

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Full retirement age (FRA)

The age at which you're eligible for your full monthly benefits, also known as the primary insurance amount (PIA). The Social Security Administration sometimes refers to full retirement age as "normal retirement age" (NRA).

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Primary insurance amount (PIA)

Also known as the full monthly benefit amount, the Social Security benefits you'll receive if you start collecting at your full retirement age (FRA). The benefits are based on your historical earnings.

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Primary insurance amount (PIA)

Also known as the full monthly benefit amount, the Social Security benefits you'll receive if you start collecting at your full retirement age (FRA). The benefits are based on your historical earnings.

Layer opened.

Full retirement age (FRA)

The age at which you're eligible for your full monthly benefits, also known as the primary insurance amount (PIA). The Social Security Administration sometimes refers to full retirement age as "normal retirement age" (NRA).

Layer opened.

Full retirement age (FRA)

The age at which you're eligible for your full monthly benefits, also known as the primary insurance amount (PIA). The Social Security Administration sometimes refers to full retirement age as "normal retirement age" (NRA).

Layer opened.

Full retirement age (FRA)

The age at which you're eligible for your full monthly benefits, also known as the primary insurance amount (PIA). The Social Security Administration sometimes refers to full retirement age as "normal retirement age" (NRA).

Layer opened.

The "reset" rule

Deborah started to receive Social Security benefits at age 64. Nearly a year later, she's working again and she wishes she'd waited until her full retirement age (FRA) so that she could have received higher benefits. Deborah can pay back all the payments she received, without interest, and file paperwork with the Social Security Administration to stop her benefits and withdraw her application.

By doing that, she "resets" her Social Security benefits so that when she starts to collect again, she'll receive a higher benefit amount based on her age. Deborah needs to consider the source of the funds she's required to return to Social Security. Using taxable assets or taking a distribution from a retirement account may be the most tax-efficient means of raising funds for the payback.