Social Security benefits: This is the worst age to claim your money, experts say

When you start drawing your Social Security benefits plays a huge role on how much you get each month.

Start drawing early and you are penalized. Wait longer and you’re rewarded but you forfeit those years of benefits.

READ MORE: How much is the 2027 Social Security COLA going to be? When will it be announced?

The formula works like this:

Social Security benefits can be claimed starting at age 62. Doing so, however, will reduce your monthly benefits by as much as 30%, as compared to waiting until what the SSA calls “Full Retirement Age” – the specific age in which you qualify for your full benefits.

Waiting after FRA can earn you roughly 8% more for each year beyond the official age, capping out at age 70.

From Social Security’s inception in 1935 until the passage of the Social Security Amendments of 1983, FRA was 65. The act established a gradual increase to the FRA, and, starting in 2021, the FRA has grown by two months a year. Currently, FRA is:

• People born 1943-1954 – Age 66
• People born in 1955 – 66 years and 2 months
• People born in 1956 – 66 years and 4 months
• People born in 1957 – 66 years and 7 months
• People born in 1958 – 66 years and 8 months
• People born in 1959 – 66 years and 10 months
• 1960 and later – 67 years

What age is the worst to start drawing benefits?

There’s one age that experts agree gives retirees the lowest probability of optimizing their lifetime income from Social Security.

According to financial website The Motley Fool, a 2019 study conducted by wealth management firm United Income found that 92% of people would be better off waiting until at least 65 to claim Social Security. Anything younger than that was less than ideal with 62 being the worst age with beneficiaries having a reduced payment for the rest of their life.

Also, Medicare does not start until age 65, meaning early retirees face a three-year gap in which they pay out of pocket for private insurance or find alternative coverage. Locking in lower payments at age 62 also permanently reduces any survivor’s benefits.

The report showed that 57% of retirees would have more money each month if they waited to age 70 to retire while only 6.5% of retirees would have greater wealth by claiming Social Security before age 64.