Should I Start My Social Security At 62?
This question is from Lloyd. He asks, “I’m planning to retire in the spring when I turn 62. Should I start taking my Social Security or should I wait?”
This is a big decision. The only decision we have when we’re looking at social security is when to file for our benefits.
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Should I Start My Social Security at 62?
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The impact of retiring early
The year you were born determines your normal retirement age. When you start Social Security before your normal retirement age, your benefits are reduced. If you’re married, the spousal benefit is also discounted. It also means a lower survivor benefit. The dollar amount of your cost of living adjustments will also be smaller. The percentage will be the same, but the dollar amount of the increase will be smaller.
A lot of people still signed up for social security early.
- 31% of men and 27% of women sign up for their social security benefits at age 62
- 6% applied at age 63
- 7% filed at age 64
- 10% applied for social security at age 65
- 33% filed for their benefits at normal retirement age
- 6% waited until age 70 to maximize their benefits
A little more than half of the recipients file for their benefits early.
A look at some numbers
You can do a lot of calculations to help determine when to start your benefits. Delaying your retirement can lead to thousands of dollars of additional benefits over your lifetime. But, you must live long enough to make it work. Generally speaking, you have to live until you are in your early 80s.
Here is how this can impact Lloyd. Let’s say his full retirement benefit is $2,300 per month. If he starts Social Security at 62, his benefit shrinks to $1,640.
At his full retirement age, his wife’s spousal benefit, if he’s married, would be half of the $2,300 or $1,150. At age 62, the spousal benefit will be, at most, $820. The combined benefits are nearly $1,000 less each month.
If Lloyd waits to start his Social Security, his discount isn’t as big.
- By waiting a full year to apply for benefits, his amount grows by 7%
- If he waits two full years, his benefit grows by over 14%
- Should he wait until age 65, three years later, his benefit grows by 24%
A big decision
Should Lloyd take his Social Security benefits at 62?
It depends. Is he healthy? Is he married? Can he afford to retire without taking his benefits and not to put too much stress on his savings? There are a lot of factors, and it’s hard to say yes or no.
Here is what we typically see. People start their social security when they retire—regardless of their age. Most of the time, it’s because they need the money. The ones who retire and delay their Social Security have been good savers and have low expenses.
You need to consider your entire situation. You can’t make the decision about Social Security in a vacuum. There are many other factors involved in this process.
If you are unsure what to do, talk to a financial advisor before you make a costly mistake.
About the Author
Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors. He specializes in helping hard working, middle class families plan for retirement.