Should You Collect Social Security at 62? Pros and Cons

Should You Collect Social Security at 62? Pros and Cons
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Anne Johnson
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Whether to collect Social Security at 62 depends on your individual circumstances. There are many reasons that you may want to collect Social Security early.

But what are the benefits of signing up for benefits at 62? And does it really hurt in the long run? Here are some pros and cons of collecting Social Security benefits at 62.

Pro 62 Retirement: Life Expectancy Allows for More Benefits

Few people want to discuss their life expectancy, but no one is immortal. In the United States, the average man lives for 74.5 years, and a woman lives for 80.2 years.

So, if a man starts collecting Social Security benefits at age 62, and lives the average number of years, he will have 12.5 years of collecting, rather than waiting until 70 and receiving only 4.5 years of benefits. Living until 80 allows you to collect even more. You’ll have 18 years of collecting benefits instead of the 10 if you wait until 70.

The break-even point is 12–14 years. In other words, it takes this amount of time to receive the same amount of benefits from delaying the payments that you would have received had you started claiming at age 62. If you want to run the numbers, here is a break-even calculator.

Pro 62 Retirement: Failure of Social Security System

It’s common knowledge that the Social Security system is underfunded. There is a projected shortfall estimated for 2034. It will require Congress to act in order to shore up the system’s financial health.

Proposals put forth to make Social Security solvent require higher taxes or reductions in future benefits.

Many people approaching retirement fear that benefits will be reduced or eliminated. By claiming early, some hope they will “lock in” their payment.

Pro 62 Retirement: Can No Longer Work or Work Part-Time

The best-laid plans can go awry. You may have thought you would work until 70. But the pandemic-induced shutdown showed that plans won’t always work out. If you are laid off from work or can’t work due to illness, collecting Social Security at 62 is a good option.
Even if you work part-time, your job is a great supplement to your Social Security check. Just ensure you stay within the income limit.

Pro 62 Retirement: No One Relying on Benefits

In the event of your death, a spouse and dependents receive money from Social Security based on your benefits.
If you don’t have a spouse or dependents and no one depends on this money, that frees you up to retire and start collecting benefits when you want.

Pro 62 Retirement: Planning End of Life and Want Benefits

Social Security benefits stop once you have died. So, if you’ve never collected Social Security and you die, you’ve missed out on that money.
There’s no crystal ball that tells you when you’re going to die. But if you are suffering from a terminal or serious illness, it may be worth taking Social Security early.

Con 62 Retirement: Benefit Increases Yearly

There’s a lower benefit when you retire at 62. The retirement benefit for Social Security increases up to 8 percent yearly when postponed to full retirement age. This is called a delayed retirement credit. You lose the credit by not waiting to draw Social Security benefits until full retirement age.
For example, If, someone was born in 1960 and they are slated to receive $1,000 at the full retirement age, they would have to wait until 67 to receive the full benefit. If they retired at 62, they would receive $700. Their retirement benefit is reduced by 30 percent by not waiting until 67.

Con 62 Retirement: Cost-of-Living Increases Are Larger

The Social Security Administration provides a cost-of-living adjustment (COLA) yearly. For example, in 2023, the COLA will be 8.7 percent. And although the percentage increase is the same for everyone, the actual dollar amount is based on your monthly benefit.

Con 62 Retirement: Opportunity to Spend Pre-Taxed Retirement Accounts

You could benefit from postponing Social Security if you have pre-taxed retirement accounts. For example, you can spend down the retirement accounts while in your sixties. This will likely reduce your future required minimum distributions (RMDs). These RMDs are 100 percent taxable. You'll replace that income when you’re 70 or older with lower-taxed Social Security benefits.

Collecting Social Security at 62

You don’t have to decide right when you turn 62. Social Security benefits can be claimed at anytime after 62. You might want to claim at 65 instead. It’s your choice.

But it’s important to consider your financial situation and goals when deciding whether to start collecting Social Security at age 62. It may be helpful to speak with a financial advisor or representative from the Social Security Administration to determine the best action.

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
Anne Johnson
Anne Johnson
Author
Anne Johnson was a commercial property & casualty insurance agent for nine years. She was also licensed in health and life insurance. Anne went on to own an advertising agency where she worked with businesses. She has been writing about personal finance for ten years.
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