Social Security is a huge program, paying about 62 million Americans more than $950 billion in benefits annually. Most elderly beneficiaries get 50% or more of their retirement income from Social Security, while 21% of married ones and 43% of unmarried ones get fully 90% or more of their income from it. Clearly, it's worth trying to get as much from the program as you can.
You can start collecting your benefits as early as age 62 and as late as age 70, and you probably know that by delaying starting to collect them, you can let them grow bigger. But should you? You may be happy to hear that there's a solid case for claiming your benefits at age 62?
middle-aged woman in glasses looking directly at camera
Image source: Getty Images.
Age matters
The full retirement age for Social Security for those born in 1937 or earlier is 65. For those born in 1960 or later, it's 67, and for those born between 1937 and 1960, it's somewhere in between. For every year beyond your full retirement age that you delay starting to receive benefits, you'll increase their value by about 8% -- until age 70. So delaying from age 67 to 70 can leave you with checks about 24% fatter. Conversely, if you start collecting before your full retirement age, your checks will be smaller. For example, if your full retirement age is 67 and you start collecting benefits at age 62, they will be 30% smaller.
Here's how much smaller your checks will be if you start collecting them before your full retirement age:
Start Collecting At:
Full Retirement Age of 65
Full Retirement Age of 66
Full Retirement Age of 67
62
80%
75%
70%
63
86.7%
80%
75%
64
93.3%
86.7%
80%
65
100%
93.3%
86.7%
66
100%
93.3%
67
100%
Data source: Social Security Administration.
That table can have you thinking you'd be best off waiting until your full retirement age. You might, but collecting early can still make a lot of sense.
It's a wash!
The Social Security system is designed so that if you live an average-length life, your total benefits received will be about the same no matter when you start collecting. Checks that start arriving at age 62 will be considerably smaller, but you'll receive many more of them. So for the many people who live a little longer or shorter than average, it's close to a wash.
Given that, and given that few of us know how long we will live, it's quite reasonable to just start collecting at age 62 -- if you can. (If longevity runs in your family and you can keep working longer, waiting makes more sense.)
torn piece of paper on which is printed "have you saved enough?" - next to a pair of red dice
Image source: Getty Images.
Can you afford to retire at 62?
Not everyone can afford to retire at age 62. We each need to crunch our own numbers to see where we stand. Take a little time to figure out how much money you'll need for retirement, and then figure out how you'll get that money.
Social Security is one source. The average monthly retirement benefit was recently $1,371, amounting to $16,452 per year, while the overall maximum monthly Social Security benefit for those retiring at their full retirement age in 2017 is $2,687 -- or roughly $32,000 for the whole year. Those who retire at age 70 in 2017 can collect monthly checks as large as $3,538, for $42,456 per year -- though most people will receive less.
The best way to find out what you can expect to receive from Social Security is to check with the Social Security Administration itself. Set up a "my social Security" account, and you can get a lot of information on your estimated benefits.
If your numbers don't look promising, there's a decent chance that you can still afford to retire early -- or at least earlier than you originally planned -- if you get more aggressive about it. Here's how much you might amass, depending on how far from retirement you are, if your money grows by an annual average of 8%:
Growing at 8% For:
$10,000 Invested Annually
$15,000 Invested Annually
$20,000 Invested Annually
3 years
$35,061
$52,592
$70,122
5 years
$63,359
$95,039
$126,719
10 years
$156,455
$234,682
$312,910
15 years
$293,243
$439,864
$586,486
20 years
$494,229
$741,344
$988,458
25 years
$789,544
$1.2 million
$1.6 million
Data source: author.
Two lit candles -- one the number 6 and the other the number 2, together representing the number 62
Image source: Getty Images.
Reasons to start collecting Social Security at age 62
Here are some good reasons to start collecting early:
To retire early: The sooner we retire, the sooner we can tackle those fun activities that we've long meant to do, such as driving across the country, taking long vacations abroad, learning to sail, tending to a big garden, or taking history courses at the local college. Early retirees often can enjoy their money more, being younger, healthier, and more able to travel, enjoy recreation, and so on.
It's a wash: Remember that for those who live a little longer or shorter than average, your total benefits received will not be vastly different whether you start collecting at age 62 or age 70. So why gamble on living a very long life, if you can start enjoying that retirement income now?
You're coordinating with your spouse: Married folks have more possible Social Security strategies to employ. You might want to start collecting benefits at 62 if it's part of an overall spousal strategy. For example, if you and your spouse have very different earnings records, you might start collecting the benefits of the spouse with the lower lifetime earnings record early, while delaying starting to collect the benefits of the higher-earning spouse. That way, you both get to enjoy some income earlier, and when the higher earner hits 70, you can collect their extra-large checks. Also, should that higher-earning spouse die first, the spouse with the smaller earnings history can collect those bigger benefit checks.
You have to retire early: Many of us don't end up choosing when to retire. The 2016 Retirement Confidence Survey foundthat 46% of retirees left the workforce earlier than planned, with 55% citing health problems or a disability as the reason and 24% citing changes at work such as a downsizing or workplace closure. Thus, being able to start collecting Social Security at age 62 can be quite handy.
Here's a little-known fact: The age at which the most people start collecting their Social Security benefits is 62. That's probably a good goal for you, too -- but even if it's not feasible for you, you may still be able to retire earlier than planned if you devise and execute a smart saving and investing plan.
