To qualify for Social Security retirement benefits, you must be fully insured; that is, you must have earned the required number of Social Security credits.  In most cases, to be fully insured you must have 40 credits, in order to qualify for retirement benefits. A credit is determined by a quarter of work or by earning $1,130. You can only receive 4 credits per year, so it takes 10 years of working to receive fully insured status.

All monthly benefits are based on your Primary Insurance Amount (PIA) which is the amount you would receive if you retired at your full retirement age (FRA).  The FRA is 65 for people born before 1938, gradually increasing to 67 for those born in 1960 and later.  Although you may begin drawing Social Security at age 62, there is no requirement to do so.  In fact, your payment increases by approximately 8% for every year you delay starting your benefits, from full retirement age up to age 70.

See chart below which lists age 62 reduction amounts and includes examples based on an estimated monthly benefit of $1000 at full retirement age:

You may begin to receive early benefits from Social Security at age 62. If you start before your Full Retirement Age (FRA), however, your benefit will be reduced. At age 62, your benefit will only be 75 percent of your Primary Insurance Amount (PIA). Depending on your lifespan, this can drastically reduce
the amount of Social Security you receive over your lifetime.

Each year you delay receiving your Social Security benefit, your payment will increase. Once you reach your FRA, you can begin receiving your unreduced, full PIA. You can continue to delay receiving benefits until age 70. Your benefit will increase by eight percent each year, from your FRA until a max at age 70.
By delaying payments from age 62 to 70, recipients will receive a 76 percent increase in benefits.

One of the most challenging questions is when to start receiving your Social Security benefit. There are positives and negatives to delaying your benefit as well as receiving it as soon as you become eligible.

Two primary factors may help you make your decision. First, do you need the money? If you need the income to cover expenses in retirement, your decision is made. However if you do not need the money, it may make sense to delay receiving your Social Security benefit and let your future payments continue to increase. Each year you delay receiving your Social Security Benefit past your FRA your benefit increases at 8%.

The second factor is your health and life expectancy. Individuals in poor health may want to begin receiving their benefits earlier rather than later, so you can have access to your benefit for a longer period of time. However if you are in good health and your family tends to live longer, it may make sense for you to wait and allow you Social Security benefit to increase by 8% each year.

There are calculators to help you determine your available benefit at various ages. By determining your breakeven age and your projected life expectancy, you can make an informed decision about when to apply for your Social Security benefit.

If you decide to work and collect your Social Security benefits prior to reaching your FRA, your benefits will be reduced on a Pro-rated amount. For 2012, if you earn more than $14,640 per year or $1,220 per month, then $1 of your Social Security benefit is deducted for every $2 earned over $1,220/month. Once you reach your FRA there is no reduction in your Social Security benefit for earned income.

During the year you reach your FRA, there is another threshold income amount that is triggered. In the months leading up to your FRA, your benefit is reduced by $1 for every $3 you earn over $38,880.

You can find a retirement earnings test calculator is available at www.socialsecurity.gov.

Contact SSA for information in the January before you intend to retire, but not earlier than three months before you turn 62.

When you are ready to apply for retirement, you can do one of the following:

• Apply online at www.socialsecurity.gov/applytoretire
• Call SSA’s national toll-free number 1-800-772-1213.  For the hearing impaired, you can call TTY 1-800-325-0778.
• Call or visit your local Social Security office.  You can find your local office at www.socialsecurity.gov/locator or in the blue pages of your phone book.

A list of documents you may need to apply for Social Security benefits is below.  The SSA needs original documents or copies certified by the issuing agency.    The SSA will make a copy and return the originals to you.  Additional documents may also be requested.

• Social Security Number
• Birth certificate
• W-2 forms
• Spouse’s birth certificate and Social Security number (if applying for benefits on your work record)
• Marriage certificate (if signing up on a spouse’s record)
• Proof of U.S citizenship or lawful alien status if you were not born in the U.S.
• The name of your bank and your account number so your benefits can be directly deposited into your account.