- Full retirement age depends on your birth date. The retirement was set at age 65 for 50 years. With the 1983 amendments to Social Security, the retirement age advanced gradually from age 65 to age 66, and continues to advance for new retirees in 2011. A person born in 1955 can retire at 100 percent of Social Security benefits at 66 years and 2 months of age. A person with a 1956 birth date reaches full retirement age at 66 years and 4 months; 1957 births can retire at 66 years and 6 months. Full retirement age advances two months for each year so individuals born in 1960 can retire at age 67 with full benefits.
- The Social Security system allows retirement at age 62. Benefits are about 25 percent less than at full retirement age of 66. If you retire at age 64, your benefits are about 12.5 percent less than at 66. The closer you get to age 66, the closer you are to 100 percent of your primary insurance amount, or PIA. The PIA is the figure shown on the Social Security statement provided each year to individuals over age 25 who pay into the system. You can retire at age 65 and receive about 6.25 percent less a month than if you wait until age 66.
- Social Security rewards you for not collecting benefits by adding to benefits each year you do not collect. If you wait until age 70 to collect Social Security retirement, you receive about 130 percent of the PIA if your full retirement age is 66. This is 30 percent more than your PIA. Your payment is approximately 8 percent more for each year you wait past age 66. Social Security adds no benefits after you reach age 70.
- If you work and retire prior to your full retirement age, Social Security penalizes you if you earn more than $14,160 a year in 2011. For every $2, you pay a $1 penalty. If you make more than $25,000, you may pay income taxes on your Social Security income as well. Taxation for joint filers begins at $32,000. The Internal Revenue Service taxes 50 to 85 percent of Social Security benefits above these income levels. Once you reach full retirement age, Social Security imposes no penalties, but you may continue to pay income taxes on your Social Security retirement benefits if you have other income.
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