The monthly Social Security benefit you're eligible for in retirement will hinge on a few different factors. One is your earnings history -- specifically, the amount of money you made during your 35 highest-paid years in the labor force.
The other big factor that will dictate how much monthly income you receive from Social Security is your filing age. Once you turn 62, you can claim Social Security at any point. But you're not entitled to your complete monthly benefit, based on your personal wage history, until you reach full retirement age (FRA), which is 67 for anyone born in 1960 or later.
There's no sense in delaying your Social Security filing past the age of 70. You can boost your benefits by holding off on claiming them past FRA, but once you turn 70, you can no longer accrue the delayed retirement credits that raise your benefits substantially.
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Because 62 is the earliest age to sign up for Social Security, many seniors ultimately opt to go that route. But here are a few signs that you might end up regretting a filing at age 62.
1. You have a family history of longevity
Just because your parents and grandparents lived until their 90s doesn't mean that you're guaranteed to do the same. But if your health is strong and your family history is one of longevity, then it's fair to assume that you, too, might live a longer life than the typical retiree. And in that situation, you might lose out on lifetime income from Social Security by claiming your benefits as early as possible.
Plus, let's say you enter retirement with $500,000 in savings. That's a nice sum, but by the time you reach your 90s, it might be whittled down. So at that point, being limited to a reduced Social Security benefit is something that might hurt you.
2. You're still working full-time
You're absolutely allowed to collect a paycheck from a job while also receiving Social Security benefits. But if you're doing so prior to reaching FRA, you could risk having some Social Security income withheld if your earnings exceed a certain threshold. And if you're working on a full-time basis and collecting your complete salary, then chances are, you'll be looking at withheld benefits for filing at age 62.
To be clear, benefits that are withheld are repaid to you later, once you reach FRA. But remember that claiming Social Security at age 62 means accepting a lower monthly benefit for life. Why subject yourself to that if you're not even going to be able to get your full monthly benefit early?
3. You don't actually need the money
Some people are afraid that if they don't claim Social Security right away, the program is going to run out of funds. But the program is primarily funded by payroll taxes, so that logic doesn't hold up well.
It's one thing to claim Social Security at 62 because you've lost your job or you hate your job and can no longer bear to do it. But if you don't have a specific need for Social Security at age 62, then there's really no sense in slashing what could be a substantial income stream for the rest of your life.
In some cases, claiming Social Security at 62 is a solid move. But in these situations, it's a choice you might ultimately regret. So think carefully before moving forward with a claim.
