The decision regarding when to begin receiving Social Security depends on two factors. The first is when you plan to stop earning income and, the second involves your thoughts on family longevity.

Full Retirement Age

Retirees can start receiving benefits from Social Security as early as age 62. However, the amount will be reduced from the amount expected at your full retirement age. To the surprise of some, age 65 is no longer the age at which full benefits are received. Any one turning age 65 in 2006 (born in year 1941), will have to wait until they are 65 and 8 months to be eligible for full benefits.

Year 2003 was the first year in which someone on their 65th birthday (anyone born in 1938) did not reach Social Security's full retirement age. Full Social Security benefits became available for this group at 65 years and 2 months. For each birth year thereafter, two additional months are required before qualifying for full benefits, i.e. those born in 1939 must be 65 and 4 months, born in 1940 must be 65 and 6 months and so on until 1943. Anyone born in years 1943 through 1954 must be 66 years and those born in 1960 and later must be 67 years of age. However, regardless of when you reach your full retirement benefit age, you can still receive a reduced benefit as early as age 62.

No Earned Income Expected

If you are 62 years or older and no longer have earned income, you should consider applying for your Social Security. The reduction is .525% from the full retirement amount for each month you start receiving benefits early. For example, those turning 62 in 2006 (born in 1944) would reach full retirement at age 66. Receiving benefits 48 months early would result in a benefit reduction of slightly more than 25%. Even though you will receive a reduced amount at age 62 versus your full retirement age, it generally takes 11 to 12 years to breakeven.

Continued employment and Social Security

If you decide to continue employment at any time from age 62 up to your full retirement age, the decision to start your Social Security retirement benefit will depend on the amount you plan to earn. You can earn up to a specific dollar amount per year ($12,480 in 2006) before your Social Security benefits are reduced by $1 for every $2 earned over that amount. Once you have reached your full retirement age, you can have unlimited earned income and still collect full Social Security benefits.

Family Longevity

Given an 11 to 12 year breakeven period, if you are eligible for benefits at age 62 (i.e. you no longer have earned income over the stated limit), but you decide to wait until age 66, you need to expect to live to age 77 to make up for the four years (age 62 to 66) that you received no monthly benefit. Once you are over age 77, waiting to receive the larger amount will begin to benefit you. However, if you die prior to age 77 due to natural or unnatural causes, you would have been better off taking the lesser amount at age 62.

Annual Social Security Reports

Each year the Social Security Administration sends you a report showing your recorded earnings by year and the monthly benefit that you can expect if you retire at age 62, your full retirement age, or age 70. The approximate benefit amount assumes that you continue to work and earn at your current rate until the designated age. If you stop working at age 62, the amount shown for your full retirement age will not be the amount you would receive by waiting to start your benefits to that age if you quit working at age 62. To get a more precise estimate, you can use the calculator provided at and enter zeros for the years leading up to your full retirement age.


Once you retire, calculate your personal breakeven point for beginning to receive a reduced amount versus delaying your benefit until your full retirement age. The closer you are to your full retirement date when you stop working, the lower the number of years to breakeven. Unfortunately, none of us has a crystal ball to tell us how long we will be collecting Social Security, so your final decision may not be based purely on the numbers.

Elaine E. Bedel, CFP, is president of Bedel Financial Consulting, Inc., a fee-only wealth management firm providing financial planning and investment management services. For more information, visit their website at or email to

  • Print
  • E-Mail
  • Newsletters

To view the past 6 months of archived Perspectives, select an article from the dropdown below and hit 'View':

To search the archive of Perspectives articles, go to the Search page