You'll have to make a lot of tough decisions in your life. When to start collecting your Social Security benefits can seem like one of them, but after you have a little information under your belt, you may find the decision becomes easier.
Most people start collecting their benefits at or around age 62, and there's a good chance that it's the right age for you, too. Here are three solid reasons you might want to start collecting Social Security benefits early, at age 62.
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1. Collecting early can help you retire early
This is the most pleasant reason to start collecting early: It can be part of an early retirement! You may not want to retire early, or you might not think you can afford to, but sometimes early retirements just happen to us, because of poor health or a job loss. If you haven't saved up enough for retirement and you can keep working beyond age 62, it's probably best to do so. But do take some time to crunch the numbers to see if retiring early is possible, because it might be.
Take a little time to estimate how much annual income you'll need in retirement, and then figure out how much you can expect from various sources. The average monthly Social Security retirement benefit was recently $1,461, or about $17,500 annually, but you'll collect more if your earnings were above average. Still, it won't be a princely sum: The maximum monthly benefit for those retiring at their full retirement age in 2019 is $2,861. (That's about $34,000 for the whole year. You'll probably need additional income from your own savings, or, if you're fortunate, you'll have pension income.
If you can swing an early retirement, it can be a great move, as you'll probably be better able to enjoy your money more: You'll probably be younger, healthier, and more able to travel, enjoy recreation, and so on.
2. It's often not worth it to delay starting to collect
Here's a possibly surprising reason to start collecting Social Security early: Even though you can get fatter checks by delaying, it may not be worth it.
Each of us has a "full retirement age," based on when we were born. For those born in 1937 or earlier, it remains 65; for those born in 1960 or later, it's 67; and for those born between 1937 and 1960, it's somewhere in between. For every year beyond your full retirement age that you delay starting to collect your benefits, up to age 70, your benefits will increase in value by about 8%. So, for example, if you delay from 67 to 70, your checks will be about 24% bigger, turning a $2,000 payment into a $2,480 one and pushing annual income up from $24,000 per year to nearly $30,000.
Despite that big bump, delaying is not necessarily worth it. Why? Well, as the Social Security Administration explains, "If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70, or any age in between." That's true because though you'll get bigger checks by waiting, you'll get fewer of them.
Thus, if you expect to live a roughly average-length life, starting to collect early makes a lot of sense. If you stand a good chance of living a very long life, though, it's worth thinking about delaying. That will not only give you bigger checks, but it can also have you working a few more years to beef up the nest egg that will have to support you for an extra-long time.
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3. Collecting early may be part of a smart strategy with your spouse
Finally, you may want to start collecting your benefits early if you've got a savvy strategy in place with your spouse and your early benefits are part of it. For example, imagine that you and your spouse have rather different earnings histories, and you have earned considerably less in your working life. You may decide that you'll start collecting your (smaller) benefit checks early, to generate some income for the household and perhaps to help one or both of you to retire early. Your spouse will aim to delay starting to collect until 70, to get those checks as big as possible. Meanwhile, whenever one of you dies, the other will be entitled to collect whichever check is larger, and that will be your spouse's maximized one.
The more you read up on and learn about Social Security, the savvier decisions you'll make regarding it -- and the more money you'll probably be able to get out of the program. With Social Security income a major income source for most Americans, being Social Security-smart is rather important.
