Should You Start Social Security at Age 62?

In this article, we will discuss whether you should start Social Security at age 62 or not. We will review the reasons that might lead you to wait and not start at this age, as well as the reasons that might encourage you to begin at this age. We will also provide tips on how to make the right decision based on your personal situation and financial circumstances.

Starting Social Security at Age 62

Unless you meet some clear criteria, you should think carefully about the idea of starting Social Security at age 62 before applying for benefits. Unless you are suffering from a critical illness, you are likely to receive a higher income over your lifetime if you decide to start benefiting from Social Security later.

For example, let’s assume you will live until the age of 84. You can receive different amounts depending on whether you start Social Security at age 62, 66, or 70. To calculate this, multiply the monthly benefit amount by the number of months in the years you expect to receive benefits.

At age 62: $835 × 12 months × 22 years = $220,440

At age 66: $1,114 × 12 months × 18 years = $240,624

At age 70: $1,470 × 12 months × 14 years = $246,960

You will receive a greater total income if you wait until age 70 to start benefiting from Social Security. If you live longer, the plan of starting at age 70 will be much better for you than the examples mentioned above.

Note: Generally, the higher your life expectancy, the longer you should wait to start benefiting from Social Security.

Reasons Not to Start Social Security at Age 62

One reason to delay benefiting from Social Security is that Social Security will withhold part of your benefits if you earn more than the allowed annual earnings limit. This applies only before you reach your full retirement age of 66 or 67 years. A portion of your Social Security benefit is deducted and gradually repaid after you reach your full retirement age.

According to the current laws of 2022, during the year you reach full retirement age, the Social Security Administration withholds one dollar from your benefits for every three dollars you earn over $51,960.

Note: There is no reason to wait until you exceed age 70 to start benefiting from Social Security.

You may also want to wait if you are single and have little retirement savings and expect to live longer. In this case, you should consider working as long as possible to maximize your benefits, then wait as long as possible (up to age 70) to start benefiting from Social Security, as you have no other retirement accounts to draw from.

If your spouse is still working and earning income, a larger portion of your Social Security benefits will be taxed if you start before your full retirement age.

Another point to consider is if you are married, your spouse’s benefit may be smaller than yours, and/or your spouse is much younger than you. When you are married, your combined average life expectancy will be longer than the individual life expectancy of each of you.

Note: If your income and tax rate will be lower in a few years, you may obtain a larger benefit and retain a greater portion of it by waiting.

Reasons

Starting Social Security at Age 62

For most people, the reasons for starting to receive Social Security benefits later outweigh the reasons for starting at age 62. However, there are exceptions:

• If your earned income will be less than the annual earnings limit, your benefits will not be reduced.
• If you have health problems and/or a shorter-than-average life expectancy, and if your spouse’s benefits are larger than your own (if you are married).
• If you do not have other retirement accounts to draw from and no means of earning income, you will have to start receiving Social Security at age 62.

Many often underestimate the true value of Social Security benefits. By looking at the amount you will receive over your life expectancy, you will be able to make an informed decision about whether to start receiving Social Security at age 62.

Sources:

• Social Security Administration. “Starting Your Retirement Benefits Early.”
• Social Security Administration. “Exempt Amounts Under the Earnings Test.”
• Social Security Administration. “Income Taxes and Your Social Security Benefit.”
• Social Security Administration. “If You Are the Survivor.”
• Social Security Administration. “How Work Affects Your Benefits,” Pages 1-3.

Source: https://www.thebalancemoney.com/should-you-take-social-security-at-age-62-2388847