For many people, they dream of the day they can afford to retire. One big question for many is at what age to start collecting Social Security Income or SSI. Most people are eligible to start collecting at age 65 but it may be worth considering waiting until you are 66. Financial expert, Suze Orman suggests to wait until at least age 67 until you start collecting SSI.
If you start taking Social Security, it will mean permanently receiving lower benefits. People are tending to live longer than they did in the past, so they have more years of retirement years to pay for. Many people are living into their nineties or even past 100 years. To make up for the difference between Social Security and your living expenses you will likely need other retirement savings vehicles besides Social Security.
The retirement age in the United States has traditionally been 65. In 2009, the age people had to be to claim full retirement benefits became 66 instead of 65. The full retirement age will remain at 66 with a steadily increasing number of months until 2027, when the age is scheduled to reach 67.
If you were born between 1943 and 1954 your retirement age is 66. The earliest you can start receiving Social Security retirement benefits remains at age 62. At age 62 you will receive 75 percent of the monthly benefit because you will be getting benefits for an additional 48 months. If you start receiving benefits at age 65, you will get 93.3 percent of the monthly benefit because you will be getting benefits for an additional 12 months.
An example of the difference of one year of collecting social security payments is as follows. If you were born in 1946, reached age of 65 in 2011 and decide to claim benefits at the traditional age of 65, your benefits would have a 6.25 percent penalty than if you would wait until age 66.
If your full retirement age is 66, the reduction for starting your retirement benefits at age 62 is 25 percent, 62 is 20 percent, 64 is 13.3 percent and 65 is 6.7 percent
Beginning to collect your Social Security payments at 65 instead of 66 can make a permanent difference in the monthly amount you will receive. The reduction can result in receiving a lower amount over the years. The earlier you start collecting benefits, the less you receive in benefits over the years.