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Apply for social security at 62? You may need to rethink this




One of the most important decisions most people face when it comes to Social Security is when to start collecting benefits. You can start your retirement benefits at age 62, but the longer you wait – until age 70 – the higher your monthly benefit will be.

The most common age to apply for benefits is 62, and it has the advantage of giving you the most checks you can ever receive in your life. Nonetheless, if you are planning to apply for Social Security at 62, you may need to rethink this.

With that benefit comes a lot of downsides, and if you’re not prepared for it before making this decision, it can cause more problems than you might think. Read on to find out five reasons.

Couple talking with a financial planner.

Image source: Getty Images

# 1: If you are still working, you will be penalized

At 62, you are younger than Social Security considers your full retirement age. As a result, you will be penalized for collecting your benefits if you still receive a paycheck. This penalty is hefty – in 2021, it is $ 1 for every $ 2 you earn above $ 18,960 in the year.

Therefore, it usually does not make sense to collect your Social Security benefits while you are still working if you have not reached full retirement age. If you earn a living wage, you might even lose all your profit while you’re still working, making it a complete mess.

N ° 2: Your monthly allowance will be permanently reduced

Because you’ll be collecting money for longer, your monthly benefit will be much lower than what you would have received while waiting until full retirement age (FRA). If you were born in 1960 or later, you will get 30% less than what you would get with the same record of income while waiting for your FRA.

If you thought your monthly benefit would be $ 1,563, which is about the average retirees currently receive, your actual benefit would be closer to $ 1,094. That’s a substantial reduction, and if you don’t plan for it, it could make a big difference to what you can afford in retirement.

# 3: you may have $ 0 or years of low income on your file

Social Security bases your benefit level on your highest 35 years of covered income. The younger you are when you apply for benefits, the greater the chance that you have $ 0 or very low income early career years on this list. If you are able to continue working beyond 62, you may be able to replace them with decent income at the end of your career.

Having more income on your file can make a key difference in what you get from the program, especially if you expect Social Security to provide a large portion of your retirement income.

# 4: your inflation protection will be less

Every year, Social Security will examine the evolution of inflation and adjust benefits if costs have risen sufficiently. The inflation adjustment for 2022 is 5.9%, the highest amount in decades. While everyone is the same percentage increase, those with a higher benefit level get more dollars from their inflation adjustment.

This amount is on top of each adjustment for inflation, which means that it is simply much easier for someone who has delayed their Social Security claim to keep up with inflation over time. The table below shows the difference waiting to claim can have on this inflation protection. It shows the potential range of inflation-adjusted benefits before and after 2022 for a person whose full retirement age is 67 and whose FRA benefit in 2022 would be $ 2,000 per year. month.

Claim age

Prior benefit

Increase in inflation

New advantage


$ 1,400

$ 82.60

$ 1,482.60


$ 2,000

$ 118.00

$ 2,118.00


$ 2,480

$ 146.32

$ 2,626.32

Data source: Social security. Table by author.

When you live on a fixed income, every little bit counts. Have both a greater daily benefit and getting more dollars with that inflation adjustment while waiting over 62 can be the difference between staying comfortable and having to make tough choices.

# 5: your surviving spouse might thank you

When a member of a married couple dies, the surviving spouse can often get the higher of the couple’s two social security benefits. While the surviving spouse may live on less than the two could live as a married couple, the loss of income due to the decline in a benefit could still be financially painful.

In addition to the direct loss of money, a widow or widower quickly loses the ability to file taxes jointly. This means that any remaining income could be exposed to higher taxes, which could make a situation even more difficult.

Therefore, consider who you can leave behind once you are deceased and what your death will mean for their financial well-being before deciding when to receive your Social Security benefit. Waiting a bit could make an incredible difference to someone you love.

The wait might be worth it

Social Security is designed to play a role in – but not to be the sole source of funding for – your retirement. When determining if 62 is the appropriate age to apply for benefits, be sure to examine your overall financial situation before committing. You might find that waiting a bit might turn out to be a better overall choice.




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