Social Security benefits play a major role in retirement income for millions of Americans. Many people wonder whether claiming their benefits as early as possible—at age 62—can help them “beat” the system and get the most money. But is this really the best strategy? Let’s break it down so you can make the smartest decision for your future.
What Happens When You Claim Social Security at 62?
At 62, you’re eligible to start receiving Social Security retirement benefits, but there’s a catch—your monthly payments will be reduced. Here’s why:
- Full Retirement Age (FRA): The Social Security Administration (SSA) sets a full retirement age (FRA), which is typically 66 or 67, depending on your birth year.
- Reduction in Benefits: If you claim at 62, your benefits will be permanently reduced by up to 30% compared to waiting until your FRA.
- Lower Lifetime Payments: Since you’ll receive smaller checks for a longer period, you could end up with less money overall.
The “Break-Even” Point: Will You Come Out Ahead?
Many people try to calculate the break-even age—the point at which delaying benefits results in higher total lifetime payments. Here’s a simple way to think about it:
- If you claim at 62, you’ll receive more checks, but each one will be smaller.
- If you wait until 67 or 70, you’ll get fewer checks, but they’ll be much larger.
In general, if you live past 77 to 80 years old, delaying benefits usually pays off because the higher payments make up for the years you waited. If you have health concerns and don’t expect to live that long, claiming early might make more sense.
Claiming Early: Pros and Cons
Pros of Claiming Social Security at 62
Immediate Income – If you need money right away, starting benefits early can help cover living expenses.
More Years of Payments – You’ll collect benefits for a longer period.
Flexibility – If you plan to invest or use the money wisely, early access could be beneficial.
Cons of Claiming Social Security at 62
Lower Monthly Payments – Your benefits are reduced permanently.
Longevity Risk – If you live a long time, you might run out of savings.
Earnings Limits – If you’re still working, Social Security will withhold some of your benefits if you earn above a certain amount.
The Advantage of Waiting Until 70
If you delay Social Security beyond your FRA, your monthly benefit grows by about 8% per year up until age 70. This can make a huge difference in your later years, especially if you live into your 80s or 90s.
For example:
- A $1,500 monthly benefit at 62 could grow to around $2,600 if you wait until 70.
- Over time, the higher payments can give you more financial security.
Who Should Consider Claiming Early?
While delaying benefits is often recommended, some people should claim at 62, including:
- Those with health issues – If your life expectancy is lower, getting benefits early could be a smart choice.
- People with no other income – If you need the money for basic expenses, waiting may not be realistic.
- Workers with lower lifetime earnings – If you don’t expect a large benefit increase by waiting, it may not be worth delaying.
Who Should Wait Until Full Retirement Age or Later?
- People in good health – If you expect to live a long time, waiting can maximize your lifetime benefits.
- Those with other income sources – If you can rely on savings or a pension, delaying Social Security can be a wise financial move.
- Married couples – Higher-earning spouses may benefit from delaying their benefits to ensure higher survivor benefits.
Conclusion
There’s no one-size-fits-all answer to when you should claim Social Security. If you claim at 62, you get more years of payments, but they’re smaller. If you wait until 67 or 70, you’ll receive bigger checks for a shorter time. The best decision depends on your health, financial situation, and long-term goals. Before making a move, consider your needs and whether waiting could give you more financial security in the long run.