Recs

21

Social Security: What Percent of Americans Claim Benefits at Age 62?

If you're thinking about claiming Social Security benefits early, then rest assured that you're in good company. According to a recent government report, age 62 remains the "most prevalent age" to do so.

Why do so many seniors defy conventional wisdom?
While the fact that many people take Social Security at age 62 might not seem notable at first, it does when you consider that the trend defies conventional wisdom.

Not only does the math seem to suggest that you should typically wait until at least turning 66, as your monthly benefits increase the longer you hold out, but virtually all of the experts on the issue say the same thing.

"By waiting until 66, monthly benefits would be 32% greater than by starting at 62 and more than 76% greater by waiting eight years until age 70," explains Buck Wargo of Complete Senior.

"With the addition of cost-of-living adjustments, that beats most investments for Social Security, which is like an annuity that is paid the rest of your life."

The question in turn is: Why do so many retirees go against this seemingly sound advice?

And the answer is: The decision to take Social Security is frequently less of an option than many experts tend to assume.

Why do people claim early: fact vs. fiction
The problem with much of the available advice on Social Security is it presupposes that prospective beneficiaries have a choice -- that they're willing and able to analyze the decision of when to apply in a cool and calculated manner.

However, new data released by the government offer compelling evidence that this belief is misguided.

In the first case, there's a strong correlation between one's type of work and when they claim benefits. "Compared to all other occupations, those who held a blue-collar job at age 60 through 62 were 55% more likely to claim early," says a recent report by the U.S. Government Accountability Office.

This follows from the fact that "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 compared to 25% of those in all other occupations."

Suffice it to say, men and women in their 60s are not designed to be working in positions that are physically demanding and require frequent heavy lifting.

On top of this, data released by the Social Security Administration strongly suggest that the decision to begin receiving benefits is based on need and thus not desire, as is typically assumed by writers and analysts who urge prospective retirees to defer until at least 66.

You can infer this from the chart below, which shows the percent of American men and women who claim benefits at age 62 -- i.e., the earliest possible time.

The thing to note here is on the right-hand side of the chart.

What this shows is that the percent of people claiming benefits at age 62 increased markedly when unemployment accelerated during the financial crisis.

The percent of men applying for benefits at age 62 increased from 33.5% in 2007, the year before the recession, to 35.8% in 2009, at the lowest point of the recession. Meanwhile, the percent of women went from 36.3% to 38.9%.

The obvious takeaway is that "declines in employment tend to increase claiming at age 62 as a replacement for lost earnings." In other words, while it's nice to think most people have the luxury of choosing when to begin collecting Social Security benefits, the data seem to suggest otherwise.

The net result is that people who do fall into the camp of early claimants can rest assured that they're in good company and that they needn't regret the decision to begin receiving checks prior to "full retirement."

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 (20) | Recommend This Article (21)

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 7:50 AM, TimoDOZ wrote:

    Taking SS reg retirement bennies @ 62 means that you are buying life insurance. You are insuring that you are going to get some of your premiums paid into FICA BACK! "Generally" actuarially you are going to get the same sum of benefits "IF" you live to your actuarially expected life span. But if you start at 62 you will also START COLA increases right away in the second year and so on. Outta the blue and into the black...And once you're gone you can never come back.... Boomers should be more informed on when to Apply and not "IF" they should. SS prefers you come in for an interview NO MORE than 6 weeks before your 62 nd birthday and that you call and make that appointment sometime near 6 weeks before that 6 weeks. I was in and out in an hour and 20 minutes with no appointment. When I was working I never had enough life insurance but now I do. The extra income after 7 years of retirement will allow us to help the extended family college students who deserve sponsorship for excellence in scholarship. It will allow us to give a LOT MORE to charity. It will help us as surrogates to fund or children's IRA's against their earned income. We already pay tax on my wife's benefit but in the 25% tax bracket still paid less than 10% of our actual total gross income in Fed income tax in 2012. There was a time when I was not paying much in taxes or FICA but then I was not working or collecting anything either. After having no earned income in the last 7 years of forced early retirement and having our retirement assets survive the great generational lows in the markets and more recently ZIRP EVERLASTING, I was pleasantly surprised that with all those zeros of the last few years avgd into my benefit calculation, it seems to have been negligible to my benefit calculation? I got "THE NUMBER" and it was over $500 more a month than I thought I would get. If I can now only live long enough to be too old to have died young...

  • Report this Comment On June 07, 2014, at 9:20 AM, lm1b2 wrote:

    Conventional wisdom would be until they are able to tell you exactly when you are going to die,definitely retire at age 62 if at all possible,greed could be your downfall !

  • Report this Comment On June 07, 2014, at 9:35 AM, lm1b2 wrote:

    The fact is that our Government does not take into consideration the type of work you do,i was in construction,a Bricklayer,and getting to the point i could not physically do the work anymore.Contractors want production,and there is age discrimination,they won't hire the elderly,so much for waiting until your 70 ! SS discriminates against people who have jobs that are physically demanding,and this should be changed,its bad enough that industries discriminate,but our own Gov.Discriminates against us !

  • Report this Comment On June 07, 2014, at 10:55 AM, sallysrod wrote:

    Yeah well like others... with the gov giving away the money we put into this system and taking from this that we pay into, its no wonder so many are taking their money at age 62.

  • Report this Comment On June 07, 2014, at 11:20 AM, Disgustedman wrote:

    Not only does the math seem to suggest that you should typically wait until at least turning 66, as your monthly benefits increase the longer you hold out, but virtually all of the experts on the issue say the same thing..........................................................................................................................The "Experts" don't suffer like I do. I have carpal tunnel, calcium deposits on spine and a hip deformity and have had CHF and take 5 pills daily for medical reasons...I'll take it at 62 if I even MAKE it there.

  • Report this Comment On June 07, 2014, at 11:55 AM, KGerbil1 wrote:

    If I wait until 70, it will take until almost 75 to get penny one over what I would get by starting at 62.

    This is a government plot to raise the retirement age in the hopes that a good portion of us die before we get any money.

    I don't know who's conventional wisdom this is, A FOOLS?

  • Report this Comment On June 07, 2014, at 2:47 PM, bobieboy69 wrote:

    I am now 65 and my full retirement age is 66. I have been on SS Disability for 5 years now. I understand that when I reach my full retirement age I automatically switch from SS Disability to regular SS, with my benifit staying the same. When I reach my full retirement age of 66, being that I am on SS Disability now, can I now stop taking my benifits until I reach age 70 and increse my benefits

  • Report this Comment On June 07, 2014, at 4:25 PM, RobAllen wrote:

    Only you can be the judge of when to retire but

    common sense tell me if I am healthy and make

    good income then why retire early & get a cut in

    salary, but if by 62 I do not have good health then I am going to retire at 62.

  • Report this Comment On June 07, 2014, at 4:32 PM, otherworldtrader wrote:

    Many people have other income and simply wish to retire early enough to enjoy before the age thing kicks them into oblivion.

    Even retiring at age 62 many rarely reach 70 before having serous money problems or health problems.

    The longer you work(especially at something you enjoy) the longer you'll be healthy.

    Ihave known people at work who announced their retirement at age 62 and was promptly retired by the company, and was told they were no longer need and would not be employed in any position. Don't volunteer to retire and expect them to keep you on at a lower hour work week. Many employees find that was a mistake. I know of several employees who announced they would be retireing in say 3 months, but would be willing to work 25 to 30 hrs a week, and every thing seemed beautiful until their retirement date and than they were just dumped forever.

    Companies know profits. Everything else you can buy at walmarts or the dollar tree store

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

    to KGerbil1, you're wrong in one thing: do the math and you'll see if you wait to pick up benefits until you are 70 you will not break even until age 80, not 75! after that, keeping the math to whole numbers and not including taxes, investment income, etc. you will be ahead only $62,000 when you hit 90. Odds are against me that I'll make 80 and certainly not 90. And for $62,000? I'll take my money now at 62, thank you, invest it Foolishly, and be way ahead!

  • Report this Comment On June 08, 2014, at 1:57 AM, greyhound44 wrote:

    I retired 31 Aug 2003 at age 58.75 after having paid Maximum SS portion of FICA for 35+ years.

    None since. Only $199. in property taxes in the US since 2004, and NO income tax since 2007 ($1820 that year).

    Screw the idiot financial advisers/experts.

    I took my Maximum (reduced for age) SS retirement benefits at 62, but I have been single for 18 years.

    Married folks have additional options.

    On 10 June 2014, I'll have received $146,537.40 from SS.

    Never paid a dime in income tax on same.

    That changes next year when I have to begin taking MRDs from my IRAs.

    retired expatiate (11 years in Conde Nast's 2013 "World's Best City") MD: NBME; ABIM; ABNM; ABR w/spec comp NR

  • Report this Comment On June 08, 2014, at 2:00 AM, so75 wrote:

    Take it at 62 and enjoy it. Break even age is in your 80's. Don't know about you but I would much rather enjoy my 60's compared to my 80's. I can use my grand parents as references.

  • Report this Comment On June 08, 2014, at 8:17 AM, Elizbee wrote:

    I say take at 62.

    This chart is wrong! I retired at 63 and receive up the chart more. You need to get your numbers right.

  • Report this Comment On June 08, 2014, at 8:19 AM, Elizbee wrote:

    I receive between what you show at ages between 68 and 69.

  • Report this Comment On June 08, 2014, at 8:38 AM, Ostrowsr wrote:

    To me, the short, non-confusing reason for taking it a 62 or 66 or 70 depends on your financial need & your gene pool. If your OK financially it's a matter of whether you feel the quality of life at age 80, when you break even, will allow you to enjoy the larger payments.

  • Report this Comment On June 08, 2014, at 9:14 AM, Str8Talk wrote:

    So many Baby Boomers lost their jobs in the last 5 years that they have been FORCED to collect their social security benefits earlier than originally anticipated.

    It's not always a CHOICE ... it's often sheer necessity !

  • Report this Comment On June 08, 2014, at 2:59 PM, PhilNo wrote:

    Why did I retire at 62? It was the first opportunity out of that hole! Unlike some, money is not my only motivation!

  • Report this Comment On June 08, 2014, at 5:11 PM, KGerbil1 wrote:

    Also this so called conventional wisdom doesn't consider what would happen if you took your benefits at 62 and invested them for income.

    That would push the 70 year old assumption out to 77 years old before you saw one dollar of benefit from deferring.

    The government NEEDS to have massive amounts of baby boomers defer, and have sent their minions out to try and bamboozle the financially uneducated into falling for this.

  • Report this Comment On June 08, 2014, at 8:33 PM, dolfan1 wrote:

    Don't know about their figures, but I started taking benefits at 62, (4 years ago) and from the start I was getting $132 more than the highest age bracket of 70. I would have gotten around $500 more had I been disabled.

  • Report this Comment On July 03, 2014, at 12:21 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+.

Add your comment.

DocumentId: 2984053, ~/Articles/ArticleHandler.aspx, 7/24/2014 5:18:01 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

John Maxfield
JohnMaxfield37

John Maxfield has been writing for The Motley Fool since 2011 with a keen interest in helping readers improve their lives and become better investors -- himself included. He has a bachelor's degree in economics from Lewis and Clark College and a juris doctorate from Southern Methodist University. He's a licensed attorney in the state of Oregon, and resides in Portland with his wife and twin sons. View John Maxfield's profile on LinkedIn

Today's Market

updated 8 hours ago Sponsored by:
DOW 17,086.63 -26.91 -0.16%
S&P 500 1,987.01 3.48 0.18%
NASD 4,473.70 17.68 0.40%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes


Advertisement