Claiming Social Security at 67? You Might Regret That.

For Americans born in 1960 or later, full retirement age (FRA) is 67. That is the age when you can collect your full Social Security benefits.

If you collect your benefits before that, you will receive less than 100%, with the percentage gradually going down until you hit the minimum age to claim Social Security, 62. If you collect retirement benefits after 67, you get more than 100%, gradually rising until you reach age 70.

So, in a perfect world, it might make sense to wait until you are at the FRA to claim Social Security to get the maximum amount each month. However, the fact is, most people, about one-third, claim at age 62.

Most people coming up on retirement in the next few years will soon have a choice to either claim early or wait until they are 67. Which year you decide to claim depends on a few factors, but here are some key questions to help you decide.

The first thing you want to do is assess the size of your retirement savings. If you are approaching age 62 and don't have a vested pension or haven't been able to save as much as you would have liked in a 401(k) or retirement account, claiming early might be a consideration.

There are many "rules of thumb" for how much you should have saved for retirement, but one of them is that you should have three to six times your current salary saved at age 50, five to eight times your current salary by age 55, and at least six times your current salary by age 62, but preferably closer to 10.

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So, if you are age 50 right now and are making, say, $60,000 per year, you should have between $180,000 and $360,000 saved already. If you are short of that, you may need Social Security income early to avoid tapping your retirement savings too hard and giving it more time to grow.

Keep in mind that if you claim before the FRA, you take a reduction in benefits. If you claim at age 62, your monthly Social Security checks will be about 30% less than if you claimed at 67. For each of the three years before FRA, benefits drop about 6.7 percentage points per year, with a 5 percentage point reduction per year for each following year before 62. But while the monthly payout will be less, you will be getting more checks -- about five years' worth if you started claiming at 62.

The other factor to consider is your employment status. If you plan to keep working full-time until 67, then it makes less sense to take Social Security early because you'll be drawing a regular paycheck, and there are no penalties if you wait until 67. That means if you work to age 67 or later, you can still get your full benefits, even if you are pulling in a salary.

If you claim before age 67, there are income limits to contend with. While the income caps change each year, currently, $1 from your annual benefit payments will be deducted for every $2 you earn above the annual income limit of $21,240 for 2023 in years before you reach your FRA. So, that means you can make up to $21,240 and still receive all the benefits you have coming to you. (The deductions and limits are different in the year that you reach FRA).

If you make more than that, benefit deductions take effect. You'll get a boost in return when you reach your FRA -- as the benefits are recalculated.

So, if you plan to retire as a full-time worker at age 62, or 65, when Medicare kicks in, but still want to work part-time, as a freelancer, or do something in the gig economy, it might make sense to claim early if you earn less than $21,240. But if you foresee working full-time well into your 60s and making more than that amount, it might be better to hold off on receiving your benefits until you get that proverbial gold watch.

These are just two factors to consider. Health issues, family, and your expected lifestyle in retirement are just some of the other issues that come into play. But there is certainly a case to be made for some folks to start claiming Social Security benefits early -- as the majority of Americans currently do.