Sorry To Say: You Probably Shouldn’t Apply For Social Security At 62

It’s understandable to be eager to retire, eager to work a lot less or not at all, eager to start tapping into retirement money. But when it comes to retirement, there can be a lot of value in delayed gratification.

Here are some reasons why you might not start collecting your Social Security benefits at age 62. See if they apply to you.

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Staging

When it comes to Social Security retirement benefits, the earliest age most of us can claim them is 62, and most retirees actually start collecting their payments at 62 or 63. year. .

Before you think about when you should apply for your Social Security benefits, be aware that the Social Security program assigns each of us a “full retirement age” at which we can begin collecting benefits. full benefits to which we are entitled, depending on our income history. For most of us it’s 66 or 67 or somewhere in between. The table below can help you identify your own full retirement age:

year of birth

Full retirement age

1937 or before

65

1938

65 and 2 months

1939

65 and 4 months

1940

65 and 6 months

1941

65 and 8 months

1942

65 and 10 months

1943-1954

66

1955

66 and 2 months

1956

66 and 4 months

1957

66 and 6 months

1958

66 and 8 months

1959

66 and 10 months

1960 and after

67

Source: Social Security Administration.

You may be behind on saving for your retirement

One of the main reasons many people should consider not collecting early is that they may be late – and perhaps very behind — in retirement savings. According to the 2022 Retirement Confidence Survey: 34% of workers say the total value of their savings and investments, excluding the value of their primary residence, is less than $25,000 — and, worse, a whopping 19% (about 1 in 5 people) have less than $1,000 saved.

Even if you have amassed, say, $400,000, that may not be enough to sustain you for several decades of retirement. If you think you depend primarily on Social Security, the average monthly retirement benefit was recently only $1,669, or about $20,000 a year. (Many collect a little more than that, and many collect less.)

Those who are behind in their savings and investments for retirement should consider working longer, in order to receive more income that can be invested for their future. Working longer also has other benefits, such as reducing the number of years your retirement nest egg will have to support you and possibly allowing you to remain on your employer’s health insurance plan for longer. years. (Medicare does not accept you until age 65.)

You can get the most out of Social Security by delaying

Also keep in mind that starting to collect your benefits before your full retirement age will reduce them — and that you can significantly increase your Social Security benefits by delaying when you start collecting them. For each year beyond full retirement age that you delay the start of your benefits, your benefits will increase by approximately 8%. For example, deferring from age 67 to age 70 can increase your benefits by 24%.

Start collecting at:

Full pension at age 66

Full pension at age 67

62

75%

70%

63

80%

75%

64

86.7%

80%

65

93.3%

86.7%

66

100%

93.3%

67

108%

100%

68

116%

108%

69

124%

116%

70

132%

124%

Source: Social Security Administration.

On the other hand…claiming at 62 makes sense to some

The reasons above should be compelling to many of us. But what if you’ve been saving and investing effectively for a long time and have a large retirement account, perhaps worth $1 million or more? If you can afford to retire early and collect smaller Social Security checks, this might be a good move for you.

It can also be good to start early if you have a decent chance of living a shorter than average life. Yes, your checks will be smaller, but you may get more out of the program, in total, than if you delayed receiving checks.

Also note that many people have start collecting early, because they end up leaving the labor market early, and not by their own choice. Since this could happen to any of us, it’s a good idea to save aggressively and invest efficiently, so you have a big nest egg ready sooner rather than later.

There’s no single best time to start collecting Social Security. Think about your own situation, learn about social security, and be sure to coordinate any strategy with your spouse. For many, if not most of us, delaying receiving benefits until well past age 62 is a smart move.

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