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4 Reasons to NOT Start Social Security at 62

Today, four reasons to not start your Social Security at age 62.

For many people, retiring as soon as they can is a major goal. One of the first ages they consider is 62. That is when you are first eligible for Social Security. Is it a good idea to retire and start your social security that early?

Watch Now: 4 Reasons to NOT Start Social Security at 62

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4 Reasons to NOT Start Social Security at 62

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Last year our most popular video was Five Reasons to Start Your Social Security at 62. Click here to watch that episode.  We wanted to keep things balanced. Here are 4 reasons to not start your Social Security at 62.

Big Discounts

If you are 62 this year, your normal retirement age is 66 and 10 months. That means your discount to start Social Security at 62 is 29%. If you reach age 62 in 2022 and beyond, your normal retirement age is 67. That means your discount to start benefits at 62 is 30%.

Delaying means you shrink those discounts. Each year you wait to start your benefits increases your payment by about 7%. Keep in mind, this does not account for cost-of-living increases. It also does not include delayed retirement credits.

Spousal and Survivor Benefits

Starting Social Security early can hurt your spousal and survivor benefits. Spouses with a big difference in earnings may qualify for spousal benefits. The lower-earning spouse receives half of the higher benefit. When the primary benefit gets discounted, the spousal benefit will also be lower.

Survivor benefits may be the bigger concern. The surviving spouse continues the higher of two benefits as a survivor benefit. The surviving spouse must deal with losing one Social Security check. And if you start benefits early, the remaining check will be smaller than it could have been.

Higher Cumulative Payments

Starting your Social Security early could mean smaller lifetime benefits. The increased payments you receive from waiting can result in thousands of dollars of additional benefits over your lifetime. For this to happen, you normally need to live past age 83.  (Please note:  Every situation is different.) The longer you live, the more money you will receive. Over time, the additional benefits could be significant.

4 reasons to not start Social Security at 62
The decision to start Social Security at 62 vs. 65 for two spouses the same age. They both have to live to age 80 to reap the benefits of waiting to start their Social Security. Over time, this can result in thousands of dollars of additional payments.

You Plan to Continue Working

Some people retire from a higher stress job but continue working in some capacity. If you are younger than your full retirement age, working can result in a major reduction in your Social Security benefits.

If you are younger than full retirement age and you earn more than $18,960, your benefits will be reduced $1 for every $2 you earn over the limit. If your new career will lead you to earn more than $19,000, you may want to wait to take those Social Security benefits.

Talk to a Certified Financial Planner™ Professional

There are a lot of things to consider when determining when to retire and start Social Security. It may be one of the biggest financial decisions you make. There is no one size fits all, or even one size fits most guidelines. You need to consider a lot of different things: your health, what you have saved, your stress level in your current job, and many other factors. Make the decision that is right for you. Talking to a financial planner can help.  Click below to have a conversation with a CFP® Pro.

 


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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.

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