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Families may be step closer getting some their college money returned.

Families may be a step closer to getting some of their college money returned.

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Updated: May 3, 2013 12:15PM

Q. When should I apply for Social Security, now, at age 62, or, later when I'm 66?

A. This is a question that millions of baby boomers are starting to face: when to start taking Social Security benefits. It's a financial decision that can be complicated.

First of all, you need to figure out at what age you'll qualify for "full retirement benefits." This is assuming you've worked and paid into Social Security for at least the required 40 quarters. Then your actual benefit check will be based on your earnings history.

The old magic age of 65 to qualify for Social Security benefits has been extended for the baby boom generation. Now those born from 1943 through 1954 must wait until age 66 to collect full, or "normal," retirement benefits. Those born later will find the age limit increases by two months every year, so that those born in 1960 or later will have a "full retirement age" of 67.

Second, you'll want an estimate of your benefits at full retirement age. You can get an individual estimate online, based on your work history, by going to www.socialsecurity .gov/estimator. It will give your current estimated benefits and show you how they would be reduced if you retire "early" or increased if you wait until later. Or you can contact Social Security for a personalized, written estimate.

Taking benefits early

You can start taking benefits at age 62 -- but your benefits will be reduced to take into account that you are likely to receive them over a longer period of time. And you should be aware that the amount of your monthly check is also calculated based on an average of 35 years of earnings. So, if you're still working at age 62, and presumably earning more than when you were younger, you might want to have those latest, highest-income years averaged in to your benefit payment.

Also, if you collect benefits before full retirement age and are still earning income, above $14,160 (in 2009), your benefits will be reduced by $1 for every $2 earned, except for the year in which you reach full retirement age, when they will be reduced by $1 for every $3 earned over $37,680 (in 2009). This earnings test is eliminated the month you reach full retirement age.

Still, many people have a reason to apply for early benefits. Perhaps they've lost a job or no longer can work. (People younger than age 65 can apply for Social Security Disability Insurance benefits -- if they're disabled and cannot work.) Or you might take a look at your health, or your family longevity, and conclude that you have a relatively short life expectancy and should start taking benefits early.

If you start collecting benefits at age 62, your check will be reduced significantly. If you were born between 1943 and 1954 and start taking benefits at 62, your monthly check will be about 25 percent lower than at full retirement. For those born in 1960 and later, the reduction rises to a maximum of 30 percent.

Delaying Social Security benefits

If you're still working, your Social Security benefits will be added to your income -- and possibly subject to tax. There is no longer an earnings limit reduction to the benefit amount if you keep working after full retirement age, but you might want to wait until you retire and have less taxable income -- and receive a larger monthly check.

If you delay applying past full retirement age, your check will be increased substantially, depending on your age. For example, if you were born in 1943 or later, and you delay 4 years, to age 70, you would get a 32 percent increase (8 percent per year). No additional credit is given for waiting beyond age 70.

With baby boomers now reaching retirement age, Social Security is geared up to answer your questions and make the process easy. Boomers earned Social Security by paying those huge taxes along the way. Now, it's time to enjoy the benefits. And that's The Savage Truth.


To celebrate the 20th anniversary of my Chicago Sun-Times column, I'll be responding to your most frequently asked questions on a regular basis. Of course, you always can submit individual questions on my Sun-Times blog reached on the home page at

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