Social Security is paying retirement benefits to more than 65 million Americans each month, which amounts to more than $1 trillion paid over the course of a year. You may be itching to join the ranks of recipients, but putting it off a while might be best.
You can claim our Social Security retirement benefits as early as age 62, and most people do start the checks rolling around age 62 or 63. But many people would be better off waiting, though. Here's why.
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Reasons to not claim Social Security at 62
Let's start with a number you need to know: your full retirement age. It's the age at which you'll be eligible to collect the full benefits to which you're entitled, based on your earnings record. For most of us it's 66 or 67. Start collecting before that age, and your benefit checks will shrink (though you'll likely collect more of them, of course). Delay collecting until one or more years after that age, and your benefits will increase by about 8% for each year that you delay, until age 70.
Check out the table below, which details how much of your full benefits you can expect to collect, depending on when you start the checks flowing:
|
Start Collecting at: |
Full Retirement Age of 66 |
Full Retirement Age of 67 |
|---|---|---|
|
62 |
75% |
70% |
|
63 |
80% |
75% |
|
64 |
86.7% |
80% |
|
65 |
93.3% |
86.7% |
|
66 |
100% |
93.3% |
|
67 |
108% |
100% |
|
68 |
116% |
108% |
|
69 |
124% |
116% |
|
70 |
132% |
124% |
Data source: Social Security Administration.
For many people, such as those with a decent chance of living a longer-than-average life, waiting can pay off. If you're going to receive, say, $2,000 per month retiring at your full retirement age of 67, you'll shrink that payout to around $1,400 if you start collecting at 62. Delay until age 70, and it becomes a $2,480 check!
Here's another consideration: Just about every year, Social Security benefits get a cost-of-living adjustment (COLA) to account for inflation. The bigger your benefit, the bigger your adjustment will be. In many years the increase may just be 1% or 2%, but for 2023, it's a whopping 8.7% due to our recent high inflation rate. Here's how that would affect the three check amounts:
|
Original Benefit |
An 8.7% Increase |
New Benefit |
|---|---|---|
|
$1,400 |
$122 |
$1,522 |
|
$2,000 |
$174 |
$2,174 |
|
$2,480 |
$216 |
$2,696 |
Source: Author calculations.
And there's one last reason why it might be best to wait until age 70 in order to maximize your check: if you're married and you've earned a lot more in your working life than your spouse has. Here's why: If you die first, your spouse will get to collect either their own benefit or yours -- whichever is greater. So by maximizing your benefit, you might greatly benefit them.
Why you might claim Social Security at 62
Of course, collecting at age 70, or close to it, does not make sense for everyone, and it's simply not possible for some. If you lose your job near retirement, you might need that income. Similarly, if you have to retire early due to poor health or having to care for someone, you might also need to start the checks flowing sooner rather than later. Those who have managed to save a hefty nest egg for retirement may be able to hang on until their full retirement age or beyond, but many people's nest eggs are not hefty.
Finally, if you stand a decent chance of living a shorter-than-average life, starting to collect early can make a lot of sense. Yes, your checks will be smaller, but you'll be collecting more of them and you may maximize all that you get from Social Security that way.
Everyone's situation is different, so spend a little time learning more about Social Security so that you can make decisions that best position you for a more financially secure future.
