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Social Security: The Biggest (and best) Reason to Claim Benefits at 62

Ask any self-described expert on Social Security when it's best to claim benefits, and they'll almost invariably tell you to wait as long as possible -- or, at least, to hold out until you're 66 years old, at which point you'll receive your entire primary insurance amount.

But while the rationale behind this advice is sound, a new study by the U.S. government also shows that it's completely out of touch with reality.

Why people theoretically should wait
The reason people should wait as long as possible before applying for Social Security benefits is simple: The longer you wait, the higher your monthly check will be. You can see this in the chart below, which illustrates the size of a hypothetical retiree's monthly benefits based on when he or she elects to receive them.

If you elect to receive benefits at the earliest possible time -- that is, in the first complete month after turning 62 -- then your monthly benefits will be 25% less than your primary insurance amount (i.e., what you're entitled to at full retirement, or 66).

Alternatively, if you wait until your 70th birthday, then delayed retirement credits will add an impressive 32%, or 8% for each year of deferment, to your monthly take.

Just to be clear, the Social Security Administration doesn't do this to punish people who choose to receive benefits early or even to persuade you to wait. It does so rather to ensure a fair distribution across claimants.

"The Social Security benefit formula adjusts monthly payments so that someone living to average life expectancy should receive about the same amount of benefits over their lifetime regardless of which age they claim," a recent report by the U.S. Government Accountability Office explained.

The biggest reason people don't wait
Despite the seemingly obvious advantage associated with waiting, most Americans choose not to do so.

According to the GAO, "62 remains the most prevalent age to claim Social Security benefits." And while the percentage of people doing so is on the decline, the most recent data shows that a full 32% of men and 38% of women begin receiving benefits in their first month of eligibility -- that is, the month after they turn 62. Meanwhile, only 13% of men and 18% of women apply for benefits at their full retirement age, and only 8% and 7%, respectively, wait until they're age 67 or older.

With this in mind, how is one to account for the gaping divide between theory and practice? In other words, why do so many experts claim that it's best to wait, while few Americans actually do?

The answer is that the age at which one chooses to receive benefits is often less of a choice than writers and analysts seem to assume. For many people, there's no other option.

"Several work-related factors may cause people to claim early and suggest they may face challenges in continuing to work until older ages," the GAO concluded. More specifically, "those who held a blue-collar job at age 60 through 62 were 55% more likely to claim early."

Think about that for a second. We're not talking about an insignificant margin here. That's a huge difference. What's behind the disparity?

Again, according to data analyzed by the government, "61% of those who held a blue-collar job at age 60 through 62 reported their job was physically demanding and/or involved heavy lifting most or all of the time."

In light of this, there are two points to keep in mind. In the first case, there's no denying the benefits associated with deferring Social Security benefits for as long as possible. But at the same time, there's also no denying the benefits associated with taking it early in order to avoid the physical wear and tear of a job that requires workers in their 60s to perform heavy lifting "most or all of the time."

In sum, if you're thinking about taking benefits early, rest assured that you're in good company, and there's no reason to second-guess yourself if you feel it's best for you.

How to get even more income during retirement
Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.


Read/Post Comments (34) | Recommend This Article (114)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 07, 2014, at 2:34 AM, DanH wrote:

    Drawing $750 a month at 62, in 16 years, at 78, you would have collected $144,000, Waiting until 66, 4 years later, and collecting $1000 a month you would earn $144,000 in 12 years, also at age 78. In other words, if you wait until age 66, in this example, you would have to draw until 78 years of age to start pulling ahead of retiring at 62.

  • Report this Comment On June 07, 2014, at 2:50 AM, Tuplanner wrote:

    I am planning on taking my SS at 62 because, 1. I am a cancer survivor with no guarantee that I will live until I am 70, 2. I am not married, therefore, nothing I have paid into SS would go to any of my survivors and 3. Even if I don't need it, I can put it into savings.

  • Report this Comment On June 07, 2014, at 2:54 AM, greyhound44 wrote:

    I retired 31 Aug 2003 at age 58.75 after having paid MAX SS portion of FICA for 35 + years and took MAX (reduced for age) SS retirement benefits at 62.

    To do otherwise would have been insane.

    Just last week I calculated all my SS retirement receipts: as of 10 June 2014 - $146,537.40.

    Never paid a dime in income tax on same, but that will change next year when I have to begin taking MRDs from my $2MM IRAs.

    My parents and grandparents all lived into their mid/late 80s, and my physicians and dentist tell me I'll live to be 100. Don't think so, but I'll get my "Deflated" contributions back from the useless USA!

    retired expatriate (11 years in Conde Nast's 2013 "World's Best City")

  • Report this Comment On June 07, 2014, at 3:24 AM, jimmyjsum wrote:

    I am turning 63 in August. I work overseas as a contractor and pay my own SS, all of it. I make a six figure salary. To me, it does not make any sense for me to start collecting my SSI because of the reduction I will take monthly from the SSI check due to the high earnings. If I wait until 66, I will draw full SSI and can continue working if I so choose. Can you dispute that?

  • Report this Comment On June 07, 2014, at 3:33 AM, vintnerone wrote:

    You have missed the number one reason why many of us took retirement at 62. We would have not taking SS at 62 but were forced into it. There was no alternative except for going homeless and begging for food.

  • Report this Comment On June 07, 2014, at 6:15 AM, ler001 wrote:

    Havent seen the most compelling reason for me to take SS at 62 v later: Would I rather have the funds when I am more likely to physically and mentally enjoy its use, or have more money and less ability to exact its use?

  • Report this Comment On June 07, 2014, at 6:25 AM, pima4sure wrote:

    Based on the sample above, break even age collecting @ 66 is 78 vs collecting @ 62, I am sure everyone wishes they knew their longevity so we could make a smarter decision. Since I don't, I will collect at 62

  • Report this Comment On June 07, 2014, at 7:54 AM, Normtwo wrote:

    There are other factors that also affect the decision; such as at 62 -65, if you work and make over a certain amount of $, your SS is reduced. At age 66 and above, there are no penalties/reductions for working.

  • Report this Comment On June 07, 2014, at 7:55 AM, sporked wrote:

    I will take my social security when I retire. It will be after 62. Possibly 62 and one month or 63 maybe 64. I'm making the call when I get close to 62. It all depends how demanding my job has become and how I feel.

  • Report this Comment On June 07, 2014, at 7:57 AM, sporked wrote:

    Geryhound44 yes your in the worlds best city which sits in one of the worlds most dangerous countries. Hope you enjoy your life in prison.

  • Report this Comment On June 07, 2014, at 8:11 AM, FactChecker2 wrote:

    As the SS administration says, the benefits are set at levels that match a person's expected remaining life so that the expected benefits break even. But if you want to maximize your expected benefits, you should take two additional factors into account that they can not: 1) Your health may not be average. Only you can adjust your plans according to your own health. 2) The SS rules may change. The SS rules are slow to change. I wouldn't expect them to change until / unless SS bankruptcy becomes obvious to everyone. The SS administration can not address either of these issues.

  • Report this Comment On June 07, 2014, at 8:16 AM, birge1 wrote:

    well, D-U-H ! everyone should take s.s. at 62 while they still have decent health to enjoy it .... and before the criminal politicians steal it all ! if you don't need it, give it to charity.

  • Report this Comment On June 07, 2014, at 8:18 AM, Hulgar1 wrote:

    I always thought I'd wait, but recently am considering taking it at 62. I'm a professional and have changed my mind because of my decreasing trust in the govt. given the economic climate. Money will increasingly be an issue, so the govt. will find more and more creative ways of revenue enhancement.

    My main concern now is that if I wait they will change the rules ans either means text me out of it or raise my taxes to effectively do the same thing - let me keep less net money.

    If that seems unreasonable, I'd submit that just in my lifetime, the govt. already has changed the rules once and increased my full retirement age. What confidence should I have they won't do this again ? My guess is they will indeed.

  • Report this Comment On June 07, 2014, at 9:09 AM, surdoja wrote:

    The rationale of taking Social Security early needs to account for many factors not identified. For example: The article never indicates that retiring at 62 could result in hitting a person's retirement or savings accounts. Early Social Security benefits would prevent that from happening, in addition the benefits of compounding interest and leaving your money in your 401K could result in higher returns, more than 8.5% compounded over time. It would be fair if your analysis could expand on this analogy.

  • Report this Comment On June 07, 2014, at 9:35 AM, pima4sure wrote:

    Also, the article did not mention that you could convert back to full benefit when you reach age 66 even though you started collecting @ age 62. Simply contact SS and arrange to pay back the payments from the last four year. This may work for people who did not spend or realized that they did not need the money in the first place. Maybe, they should mention that option with SS in their next article.

  • Report this Comment On June 07, 2014, at 10:06 AM, earth2sterling wrote:

    The best reason to claim Social Security benefits at age 62 is that whenever there is a discussion about ways to alleviate the coming shortfall in benefits, a majority of people think "the Rich" should not get benefits. So if you saved your money for your retirement, you are punished.

  • Report this Comment On June 07, 2014, at 11:02 AM, RalphinFL wrote:

    My father retired at 62 for health reasons. Otherwise, he likely would not have survived to 65.

  • Report this Comment On June 07, 2014, at 11:53 AM, sarainmontana wrote:

    In every one of these reports they fail to mention the two most important factors,

    #1 Life expediency

    #2 Quality of Life

    If you wait until 70 to take Social Security and die at 72, how much did you really make??

    If at 70 you your health has failed to the point that all you can do is sit on the porch, what good is a few hundred dollars a month, when you can't do a thing with the money?

    The only sound piece of advise here and in most articles about SS income always has the term "if" and if my aunt had balls, she would be my uncle, so think about that one.

  • Report this Comment On June 07, 2014, at 1:46 PM, Deserttax wrote:

    pima4sure: You can't do that anymore. Now, you have 12 months from the time you start taking SS benefits to repay. After that, you're stuck.

  • Report this Comment On June 07, 2014, at 2:15 PM, jheidmann1550 wrote:

    I keep hearing about the need to wait on SS as u get more if wait. However, if u choose not to or are unable to work you will be drawing down on any investments you have much more quickly. Using SS at 62 and 1/2 does give us a lower SS benefit, but most of it is non taxable and the biggest bang for us is that we continue to let most of our pretax IRA investments grow.

    Phx Jim

  • Report this Comment On June 07, 2014, at 2:44 PM, elmerfusco wrote:

    Another good reason is my wife is 5 years older than me. She works full time, will take her full ss at 66. I will take mine at 62 and keep working my part time job. (she has a better job)

  • Report this Comment On June 07, 2014, at 3:00 PM, SueKnits wrote:

    If you are working and are making more than allowed, between ages 62-66, is it still worth it taking SS at 62 and do the payback? Can't remember if the payback is keep $1 send back $2 or keep $2 and send back $1

  • Report this Comment On June 07, 2014, at 3:01 PM, luchetti1225 wrote:

    SORRY I AM WAITING AS LONG AS I CAN WAS LAID OFF AT AGE 50 AND NOW AT 62 I PLAN ON WAITING UNTIL 70..HAVE NO CHILDREN AND HUSBAND IS 10 YEARS YOUNGER WE OWN OUR PLACE WITH NO MORTGAGE AND HUSBAND PAYS EVERYTHING SO WHY SHOULDNT I WAIT UNTIL 70???? STILL WONT BE ABLE TO COLLECT ON HIS WITH YOUNG HUSBAND

  • Report this Comment On June 07, 2014, at 5:49 PM, rebecca1452 wrote:

    I started collecting SS $ on my husband's social security when I was 66. It was $100 less than my own social security. When I am 70 I will start collecting on my own social security for $600 more.

  • Report this Comment On June 07, 2014, at 6:33 PM, westportmn2000 wrote:

    There is another consideration and why you should take SS early. I retired at age 64 and could easily fund my retirement and wait until age 70 before collecting SS.

    Why should I spend my money and deprive my children of a healthy inheritance? I will live on the social security along with supplementing with pension. SS stops when I die and cannot be passed on to children. I may never have to touch the principal of my savings this way and pass it along after death to my children. A much better result.

  • Report this Comment On June 07, 2014, at 11:27 PM, psars61 wrote:

    I have no intention on collecting at 62 for such a paltry sum. I am a professional who will work well into my 60s as long as I am healthy.

  • Report this Comment On June 08, 2014, at 1:11 AM, marget wrote:

    I'm 65, continuing to work as a freelancer, and waiting until 70 because I don't have enough saved. The difference between 66 and 70 is $550/month, so for me that says it all. Definitely a gamble, of course. If I die early, the US taxpayers win. If I have my dad's longevity (93), I win and I'll be most happy to have that extra cash. Dad of course regretted starting at 62.

  • Report this Comment On June 08, 2014, at 1:13 AM, bkmobal wrote:

    The U.S. Supreme Court ruled in Fleming v. Nestor (1960) that there is no Constitutional right to Social Security benefits. Social Security benefits can legally be cut or eliminated et any time, and beneficiaries have no recourse. The Court held that, "To engraft upon the Social Security System a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustments to ever changing conditions which it demands."

  • Report this Comment On June 08, 2014, at 7:49 AM, theblume wrote:

    If you decide to collect SS at 62 and want to continue to work, the government will tax 50 cents on every dollar you earn over $14,000 per year. In addition, the IRS will take 25% of SS at 62. At 66, you can earn as much as you like and receive full SS. I am waiting until I am 66...

  • Report this Comment On June 08, 2014, at 9:22 AM, PsiKick wrote:

    I figured that it would take approximately 11 years (age 76) if I waited until 65 to collect, to get back the money I would collect between ages 62 and 65. I stopped working at 59 and started collecting at 62.

    In other words if you wait until 65 you wouldn't see the extra money until about age 76 because of the money you don't collect between 62 and 65.

    My retirement plan was simple and doesn't require a million+. Be totally debt free. Collect at 62. Have a modest dividend paying portfolio worth between 200 to 500k and live off the dividends while growing the principle.

  • Report this Comment On June 09, 2014, at 4:51 AM, Miker1951 wrote:

    No reason for me to collect at 62. I am 63 my wife retires this year at 62. She will collect in Jan 2015. With her pension and her SS. We can live better than before. We can draw off our $1.5M nestegg to make up any shortfall and live better in retirement than before. I will wait until 65/66 until I start collecting. Will let mine grow as much as possible. At least this way if I die first my wife can collect my SS which would be double hers. If I don't need it now, no reason to collect.

  • Report this Comment On June 09, 2014, at 9:10 AM, Mathman6577 wrote:

    I agree with sarainmontana. Almost all recommendations fail to address the quality of life issue. And a theory I've had for awhile is that most of the "experts" that recommend waiting (e.g. financial planners, etc.) have a vested interest in people not having other sources of income (like SS) so they can profit from managing your investments.

  • Report this Comment On June 21, 2014, at 1:28 PM, sunflowernm wrote:

    What I have always heard is that most of us working fools draw the balance of our SS within 3 years of retiring and collecting it! Is this true? For me, I say yes. When I look at the balance on my own SS report, I will draw the full balance in about 3 years. Now just how long do we think we can keep drawing on these accounts...before they go broke? Guess that is why we keep letting immigrants into this country. Need more working fools...

  • Report this Comment On July 03, 2014, at 12:29 AM, Energo wrote:

    In my situation, assuming a 4% return on my investments, if I take Social Security at age 63, therefore, I'll take less from my investments, giving me a break even point at age 97+.

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John Maxfield
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John has written for The Motley Fool since 2011. He has a bachelor's degree in economics from Lewis and Clark College and a juris doctorate from Southern Methodist University. View John Maxfield's profile on LinkedIn

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