Although it's a good idea to read up on Social Security throughout your working years, age 62 is when you might really want to start focusing on those benefits. If you'll be turning 62 in the coming year, here are some important Social Security points you should know about now.
1. You're old enough to sign up for benefits
Age 62 is when you're first allowed to start collecting Social Security. Many people mistakenly assume that age 65 is the earliest Social Security filing age because that's when Medicare eligibility kicks in. But actually, the two programs work independently and allow seniors to enroll at different times.
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2. If you file for benefits at age 62, they'll be reduced
Although you're allowed to claim Social Security at age 62, you may not want to. You're not entitled to your full monthly Social Security benefit based on your wage history until full retirement age (FRA) arrives. And that age is either 66, 67, or somewhere in between, depending on the year in which you were born.
What will your monthly Social Security benefits look like if you claim them at 62? If you're turning 62 in 2023 and were therefore born in 1961, it means your FRA is 67. And in that case, filing for benefits at 62 will mean slashing your monthly payments by 30%. Talk about a pretty significant blow.
3. If you're still working and collecting benefits, you'll risk having some Social Security income withheld
The Social Security Administration will allow you to work and collect monthly benefits at the same time. And you may decide to go that route and ease your way into retirement -- meaning, work on a part-time basis rather than go from a full-time work schedule to not holding down a job at all.
But you'll need to be careful if you go this route because if you start collecting Social Security before you reach FRA, you'll be subject to an earnings-test limit. That limit changes from year to year, but if you'll be 62 in 2023, you can only earn up to $21,240 without impacting your benefits. From there, you'll have $1 in Social Security withheld for each $2 you earn.
To be clear, withheld Social Security benefits aren't forfeited on a permanent basis. Rather, they'll be added back into your monthly benefit once you reach FRA.
But remember, claiming Social Security at age 62 means getting stuck with a lower benefit on what's generally a lifelong basis. If you're going to take that hit, you may want to limit your earnings so you don't get stuck having some of your benefits withheld.
A very important age
You may not think of 62 as that significant an age, but from a Social Security standpoint, it certainly is. If that's the age you'll be reaching in 2023, make sure to commit all of this critical information to memory so you end up making smart Social Security decisions that lead to a lifetime of financial stability.
