Are you considering retirement early? For many Americans, Social Security plays a significant role in when and how retirement occurs. If you're planning to start your Social Security benefits around the age of 62, it's important to understand how this decision could impact your finances now and in the future. Stay tuned as we explain the implications of claiming early on your paycheck and offer strategies to ensure you get more out of your retirement.
How Social Security Calculates Your Benefit
When you apply for Social Security, the amount you receive depends on something known as the primary insurance amount (PIA). It is calculated using your 35 years of highest earnings and adjusted to reflect inflation. The Social Security Administration (SSA) averages these years and plugs them into formulas to calculate your monthly payments. The longer you wait to be eligible (up to the age of 70), the bigger your check will be due to delayed retirement credits.
How Much Will You Get at 62?
Here's the kicker: if you begin collecting Social Security at 62, your monthly payment will be forever reduced, compared to waiting until you reach your full retirement age (FRA)—which is typically 66 or 67 for the majority of workers today (depending on the year you were born). For instance, a typical early retiree will see about 30 percent less in their monthly Social Security benefits.
- Maximum benefit at FRA 2024: $3,822/month
- Maximum benefit at 62: About $2,710/month
- Monthly average benefit for 62-year-olds: $1,276 (SSA 2024)
Your specific amount will depend on your earnings and work history. So, check your Social Security Statement to get an estimate tailored to your needs.
Why Do So Many People Claim Early?
Despite the decrease in benefits, more than 3 out of 5 people take Social Security as soon as they reach 62. There are a variety of reasons people retire earlier than expected: illness, layoffs, or family obligations. Many people simply want to enjoy their golden years while still young.
About 30 percent of Social Security recipients today started receiving benefits when they reached 62, making it the most popular start date for retirees.
By choosing to lock in your retirement benefits early, you are limiting your future income, which is a crucial factor as retirees today are living longer, often spending at least 25 years in retirement.
How Delaying Social Security Boosts Your Retirement Income
Consider this: For each year you put off Social Security past 62 toward full retirement, your benefit will increase by approximately 6–8 percent. Waiting until 70 will result in an annual payment that's 77% more than if you start at 62. This is a significant difference that could be a notable sum over the course of a few years.
- Wait until full retirement age (66/67): You get your full benefit.
- Wait until 70: Benefits will increase because of delayed credits.
- Claim at 62: Benefits are reduced and remain that way for the rest of your life.
It's true that life isn't always predictable. However, the financial benefit of waiting is obvious, especially if you plan to live to your mid-80s or even beyond.
Smart Strategies for Optimizing Your Benefits
Not everyone should wait to apply for Social Security. However, there are ways to maximize your options:
- Review your Social Security Statement every year.
- Aim to work for at least 35 years (shorter work history lowers your average)
- Plan your claiming strategies with your partner or spouse to maximize the total household income
- Consider your health, family longevity, and income needs
- Find your break-even age—the point at which waiting is paid off
Should You Start Social Security at 62? Key Questions to Ask
The decision of when to claim Social Security benefits is very personal. Here are the most important questions you need to consider:
- Do you need the money immediately or can you tap savings?
- How is your health and expected lifespan?
- Can you continue working after 62? (Earning over certain limits could temporarily decrease your benefits.)
- How will your decision impact your spouse's future benefits?
Social Security is only one part of the retirement puzzle. It's important to consider the entire picture before making claims.
A few honest reflections on the subject. I've seen a lot of friends wrestle with this issue. Some jumped in at age 62 and later regretted not waiting a bit, especially after seeing the long-term impact on monthly payments. However, I know the satisfaction of receiving your first benefit check. The balance between the excitement of early retirement and your financial security in the future is something you must decide for yourself. Doing your research now could save you a lot of regret later on. If you're wondering how much Social Security you'll get at 62, it's worth crunching the numbers with a calm mind.
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