Should I Apply for Social Security Benefits at 62?

Nov 20th, 2014 by Ziva Beck in Retirement

As you get closer to 62, there is one important financial decision you will have to make. You can choose to collect Social Security benefits at age 62 or delay it until 70. The decision is personal and depends on your specific circumstances. However, there are several considerations that can help guide your decision.

1.  You will receive a higher Social Security benefit for every year you wait
Full retirement age is around 66 or 67 (if born after 1960). If you start collecting Social Security at 62, you will receive a 25%-30%(based on your full retirement age) lower payment than if you’ve waited until your full retirement age. In addition, if you wait until you are 70, you will receive 8% increase in benefits for every year you wait. For example, if your full retirement age is 67 and your full Social Security benefit is $1000, it will be reduced to $700 if you start collecting at 62 or increase to $1240 if you wait until 70. A simple break-even analysis for collecting at age 62 vs. 70, shows that the break-even age is around 80. You will receive more in total benefits if you will live longer than that. If you are in good health, have good genes and expect to live into your 80’s and 90’s, then maximizing your Social Security payment is a good strategy.

2. Your life expectancy
If you have health concerns and believe that your life expectancy is lower than average (see life expectancy calculator link below), then it might make sense to start collecting Social Security early.

3. You need money to cover your living expenses
If you need money to cover your living expenses now and there are no other options, then you have no choice but to apply for Social Security early and receive a smaller payment for life.

4. You plan to work after 62
If you work between age 62 and your full retirement age, Social Security will reduce your benefit $1 for each $2 earned above Social Security limit. In 2014 this limit was $15,480. So if you make more than the limit, it probably will not make sense to collect Social Security at 62.

5. Your social security benefit is higher than your spouse’s
Couples have an additional consideration. If your full Social Security benefit is higher than your spouse’s it might make sense to postpone collecting your benefit. Even if you have health concerns, you might want  to consider your spouse’s life expectancy as well. Your surviving spouse can collect Social Security benefits based on their own earnings or yours. It might make sense for you to wait to collect your benefits so that you and your spouse can collect a higher amount for the rest of your life.

6. You are more comfortable having the money sooner than later
If you worry about the future of Social Security or just more comfortable having the money early then collecting sooner might be the right option for you. You also need to be comfortable with having a lower benefit for life. It is true that Social Security has reserves to pay full benefits until 2037. After that, new revenues will be able to cover about 75% of scheduled benefits. However, with small changes the system can continue to pay full benefits. Because of political implications and how changes to the system were implemented in the past, it is unlikely, that any policy changes will impact current retirees or someone who is near retirement age.

I still have some time before I need to make this decision but my husband is getting closer to 62. He is in good health and hopes to work late into his 60’s. So for him it makes sense to delay collecting benefits for as long as possible. Actuarial life expectancy table from Social Security, shows the average life expectancy for a 62 year old man is around 81 and for a 62 year old woman is around 84 . So statistically speaking for most people, the longer they wait to apply for their Social Security benefits the higher the total benefit they will receive.


USEFUL LINKS  – – Social Security actuarial table for life expectancy  – Quick life expectancy calculator  – Life expectancy calculator with basic health and lifestyle considerations – Social Security guide from the Center for Retirement Research at Boston College – Early or late retirement calculations – Shows how your benefit is reduced based on what age you start collecting benefits – Shows how your benefit is reduced based on your full retirement age – Full list of considerations from Social Security – Offers a Social Security calculator with different strategies for singles and married couples for a fee. Starting with a $20 personalized report.

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