2 reasons to take social security at 62 – and 1 reason to wait
2 reasons to take social security at 62 – and 1 reason to wait

2 reasons to take social security at 62 – and 1 reason to wait

While preparing for retirement, one of the most important decisions you will want to make is at what age you should start claiming Social Security benefits. The earliest you can apply for benefits is 62 years old. It is also the most popular age to start claiming, with about 35% of men and nearly 40% of women receiving benefits at 62, according to a report by the Bipartisan Policy Center.

There is not necessarily a right or wrong age to apply for social security, but there are pros and cons. There are a few scenarios where you may want to make claims as early as possible, and a situation where you may be better placed to wait a few years.

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When to consider claiming 62

1. You want to retire early. You do not necessarily have to start claiming benefits as soon as you retire, but the two often go together. If you want to get started in retirement, then it may be helpful to start taking social security early.

It is possible to retire early, but delay social security. However, you need to rely on your savings or other sources of income until you start receiving benefits. In many cases, it is not worth draining your pension fund too soon of the boost in benefits you would receive by waiting.

In the same way if you are forced to early retirement (due to job losses, health issues, etc.), early claims can provide an additional source of income. If money is tight and your savings fall short, Social Security can go a long way.

2. You may have a shorter-than-average life: In theory, the total amount you receive in benefits should be roughly the same no matter what age you file. If you make claims early, you will receive smaller checks each month, but more of them over the course of your life. By waiting to make claims, you will earn larger payments, but fewer of them in total.

The time when the amount you would receive by deferring benefits overtakes the amount you would collect by filing early is called your “breakeven age,” and for most adults it will be somewhere at the end of 70s or early 80s.

If you expect to live well into the 80s or beyond, you can receive more over the course of a lifetime if you defer Social Security. However, if you have reason to believe that you may not be living until the late ’70s, you may be better off claiming as early as possible to maximize your benefits.

When you might want to wait

1. You want to maximize your monthly income. One of the best reasons to consider deferring social security is to maximize your monthly income. While the amount you receive over the course of a lifetime should be roughly the same no matter when you apply, your monthly benefit amount will largely depend on the age at which you apply.

If you apply as early as possible when you turn 62, your benefit amount will be reduced by up to 30%. However, if you delay the benefits (up to 70 years), you will receive your full benefit amount (or the amount you charge by claiming full retirement age) plus up to 32% extra each month.

These performance adjustments are usually also permanent. When you start applying, your benefit amount will be fixed for the rest of your life (excluding annual cost of living adjustments). So if you delay the benefits, you can receive hundreds of dollars more per month for the rest of your pension.

Deciding at what age to apply for social security is not easy, but it can have a significant effect on your pension. By making this decision carefully, you can go into your senior years as prepared as possible.

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