Please ensure Javascript is enabled for purposes of website accessibility

Claiming Social Security at 62? 3 Things You Need to Know

By Maurie Backman – Jun 21, 2021 at 5:36AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Many seniors rush to sign up for benefits at 62. But here are some important points to keep in mind before going that route.

Medicare eligibility begins at 65, and you get the same coverage no matter when you enroll. But with Social Security, you get choices. You can claim benefits as early as age 62 or delay your filing until the age of 70.

62 happens to be the most popular age to sign up for benefits. If you're thinking of going this route, here are a few key things you need to know.

Two people looking at book outdoors

Image source: Getty Images.

1. You'll slash your monthly benefit for life

Your monthly Social Security benefit is based on your earnings during your highest-paid 35 years in the workforce. And you're entitled to that complete benefit once you reach full retirement age, or FRA.

FRA is either 66, 67, or 66 and a specific number of months, depending on your year of birth. But for each month you claim benefits ahead of FRA, they'll be reduced on a permanent basis. If your FRA is 67 and you sign up at 62, you'll lose 30% of your benefit, so that's a hit you'll want to make sure you can afford to take. And if you don't have a lot of retirement savings, you may want to sign up at a later age.

2. You may come out ahead financially if you don't live very long

Filing for Social Security at 62 will result in a lower monthly benefit, but it won't necessarily result in a lower lifetime benefit, especially if you pass away at a relatively young age. In fact, if your health is poor going into retirement, it could pay to sign up for Social Security as early as possible.

Say you're entitled to a $1,600 monthly benefit at an FRA of 67. If you file at 62, that monthly benefit shrinks to $1,120. However, you'll also get benefits five years sooner. And if you wind up passing away at the relatively young age of 76, you'll come away with an extra $15,360 in your lifetime by filing at 62 rather than 67.

3. You'll risk having benefits withheld if you're still working

You're allowed to collect Social Security and work at the same time, but if you do so before reaching FRA, you'll risk having benefits withheld temporarily if your earnings exceed a certain threshold. Now that threshold changes from year to year. Right now, it's $18,960, but it could rise in 2022. But in 2021, once your income exceeds that threshold (assuming you won't reach FRA this year), you'll have $1 in Social Security withheld for every $2 you earn.

If you're still earning a sizable paycheck from work, you may want to hold off on claiming Social Security rather than rush to file at 62, because you'll not only slash your benefits, but also, risk having additional money withheld.

There are plenty of good reasons to sign up for Social Security at the earliest age of 62. Just make sure you know what you're getting into before going that route. The last thing you want to do is lock in a lower monthly benefit for life and regret it throughout your retirement.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.