Social Security benefits are calculated using the Normal Retirement Age (NRA), which is 67 for people born after 1960. If you take benefits early, your payment will be reduced by as much as 30% if taken at age 62. After NRA, your benefit will be increased by 8% for every year you defer benefits. You cannot defer taking Social Security past age 70.

As a rule of thumb, the closer to age 70 you retire, the higher your Social Security benefits will be. Of course, there are some specific guidelines. Everyone has an NRA (Normal Retirement Age), which determines the age at which you can receive your full Social Security benefits.

For example, someone born in 1955 will receive their full benefit amount if they start claiming at age 66 and 2 months, while everyone born after 1960 must wait until they turn 67 to receive their full amount.

You can start claiming your benefits as early as age 62, but this will mean that your benefit will forever be reduced by as much as 30% of what it would have been if you had waited until you reached your NRA.

If you defer benefits past NRA, your benefits will be increased by 8% for every year of additional deferral. You cannot avoid taking your social security benefits past age 70, even if you are still working.

You will still receive your full benefit at that point, but your income will not increase your benefit amount (by adding one of the best 35 years into the calculation for benefits) once you have passed age 70.

Most financial planners suggest that you defer social security income as long as you can to give yourself the largest guaranteed lifetime income stream possible.

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