Claim Social Security at 62? You may regret it Personal Finance

(Selina Marangian)

One day, you’ll likely be among the tens of millions of Americans who collect Social Security (65 million, as of 2021). How much will you collect? Well, the answer to that is different for each of us, and it mostly depends on how much we’ve earned in our working lives – and also to a greater degree when we start collecting benefits.

We can start compiling as early as age 62, and most people start compiling around age 62 or 63. There are good reasons not to do this – as well as some arguments in favor of it. Here’s a closer look at why you might regret claiming at 62 — followed by some reasons that might make sense to you.

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1. You will end up with smaller checks

Most of us havefull retirement age“Where we can start to collect the full benefits that we are entitled to, based on our earnings history, and for most of us, it’s 66 or 67. For every year before the full retirement age that you get your benefits, it will shrink specifically, you’ll get About 70% to 75% of your full benefits if you start collecting at age 62.

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This isn’t perfect, but it’s also not as bad as it sounds – after all, while the checks may be smaller, you’ll collect a lot more in total. For those who live moderately long lives, there will be little difference in the total benefits received regardless of when benefits start to be provided.

2. Pretending too soon can ruin a smart matrimonial strategy

However, you should think about the bigger picture before deciding when to start collecting your benefits. For example, married people may benefit most from Social Security by coordinating when each of them begins. While both of you will enjoy two benefits checks each month, it’s possible that at some point, one of you will go — and then only one will be arriving. The rules allow you to collect any greater benefit. So it’s worth trying to check at least one of your benefits as closely as possible.

A good way to maximize your benefits is to delay the start of earning it – until age 70. If the spouse with the largest earnings delays until the age of 70, this can greatly help the lower-income earner, if he or she is a surviving spouse in the future.

3. If you plan to continue working, your benefits may diminish

Another consideration is if you Plan to continue working After age 62. If you start collecting Social Security and then also work, if you earn more than a certain amount, the Social Security Administration (SSA) may cut your benefits. As he explains:

If you’re under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2022, that limit is $5,660.

In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different threshold. In 2022, your maximum earnings are $51,960. We only calculate your earnings until the month before you reach your full retirement age, not your earnings for the entire year.

This may sound horrible, but once you reach your full retirement age, the SSA will stop withholding benefits and will recalculate your benefits, given what was withheld. So you will get at least some of the retained benefits. However, it may be best not to start collecting these benefits early if you plan to continue working for much longer.

on the other side…

Despite the above reasons, there be Some reasons why you might want to start collecting files Social Security benefits early. For example:

  • You don’t know how long you will live. If you end up waiting until age 70 to collect the money and then die at age 72, you won’t be out much of Social Security. Think a little about your health and how long your relatives lived. If you have a good chance of living a very long life, delaying as long as possible may be best.
  • Perhaps you can afford to retire early. Many people start reaping the benefits early because they have to. They may have lost their jobs or for whatever reason they simply need this income ASAP. Many of those who can afford to delay should start collecting their benefits, but if you do a great job saving and investing for retirement and can afford to retire early, starting early can make sense.

The decision on when to start collecting Social Security benefits will be different for most of us. Take some time to learn more and think about everything before taking any actions, so that you can get as much out of the program as possible.

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