Social Security eligibility starts at 62, but should you really be claiming then?
The earliest age to claim Social Security also remains the most popular, according to the Center for Retirement Research. But signing at 62 could prove to be a costly mistake for some seniors. And for others, it might be exactly the right thing to do. There are several factors that influence the best time to claim Social Security, so review the information below before deciding if 62 is the right time to register.
Why the age at which you sign up for benefits matters
Signing up for benefits immediately at 62 means you get checks for more years, but it doesn’t always make you the most money. When you start Social Security at 62, you technically enroll early, and the Social Security Administration reduces the size of your checks to balance out the extra years you receive benefits.
Claiming “on time” means waiting for your full retirement age (FRA). It’s somewhere between 66 and 67, depending on your year of birth. Signing up at this point gives you the standard benefit you are entitled to based on your working record. You can also continue to defer benefits until age 70, when you are eligible for your highest possible benefit.
Each month you delay benefits slightly increases your checks, but delaying also means fewer checks overall. To ensure the greatest lifetime benefit, you need to consider your life expectancy as well as the size of your checks at various claim ages.
If you don’t expect to live long, it’s generally wise to pretend to be 62, as you might not get anything from the program if you try to keep your FRA or 70 and die before you reach it. But those who expect to live long are likely to make more money in the meantime.
Suppose you are entitled to a benefit of $ 1,500 at your FRA of 67. If you start at 62, you will only get $ 1,050 per month, but you will receive an additional five years of checks. If you only live to 70, pretending to be 62 was definitely the best decision. You would have received $ 100,800 compared to the $ 54,000 you would have received had you started receiving benefits from your FRA. But if you live to age 87, enrolling at 62 would have cost you dearly. You would only have received $ 315,000 compared to the $ 360,000 you might have had if you had waited until age 67 to register.
Good reasons to register at 62
While a short life expectancy is one of the reasons to consider purchasing Social Security benefits as soon as you are eligible, there are other reasons why it may make sense. Some people have no choice but to enroll as soon as they can because they need their Social Security checks to help pay their bills. They may be unable to afford retirement otherwise. In this case, signing up for 62 makes more sense than going into debt. But if you are able to defer benefits even for a few months, you might increase your lifetime benefit slightly.
Another reason to consider enrolling at age 62 is if you are the lowest paid spouse and your spouse plans to defer benefits to their FRA or beyond. Claiming immediately will give you a reliable source of income to supplement your personal savings. When your spouse signs up for benefits, the Social Security Administration will automatically switch you to a spousal benefit if it gives you more than what you are currently receiving.
But this strategy usually only makes sense if your spouse earns a lot more than you in your working life and needs you to file a claim early so they can afford to delay their own benefits. If both spouses have earned roughly the same income over their lifetime, or if the higher-income spouse can afford to delay without the lower-income spouse claiming, the couple will likely get a benefit. longer by having both spouses delay benefits for as long as possible. .
While it’s a good idea to start thinking now about when you might want to start claiming Social Security, know that your decision is not set in stone. You are free to change it over time as your lifestyle, finances, and thoughts about retirement change. It’s a good idea to review Social Security at least every few years and make adjustments to your retirement plan if necessary if you decide to change when you enroll in Social Security.