One of the biggest retirement decisions most of us will make is deciding when to start receiving our Social Security benefits. That's because the age at which you start collecting determines, to some degree, the size of the checks.
Take a few minutes to learn how the system works and why you might want to start collecting Social Security at age 62.
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You "full" retirement age and when you can start collecting
You may be assuming that The Social Security Administration expects you to retire at 65, an age often thought of as the typical retirement age. That was once the official "full" retirement age at which people could start collecting their full benefits, but the rules were changed in 1983. The SSA now assigns our full retirement age based on the year we were born. For those born in 1937 or earlier, it's 65, for those born in 1960 or later, it's 67, and for those born between 1937 and 1960, it's somewhere in between.
Regardless of your full retirement age, you're allowed to start receiving your Social Security retirement benefits early as age 62 or as late as age 70. Most people start collecting Social Security at age 62 -- and here are three compelling reasons why you might want to do the same.
Reason No. 1: You might simply have to start at 62
Despite the good plans we might make for how our lives should unfold, things often don't turn out as expected. Fully 46% of retirees left the workforce earlier than planned, according to the 2016 Retirement Confidence Survey, with 55% citing health problems or a disability as the reason and 24% citing changes at work such as a downsizing or workplace closure.
Since there's a not-insignificant chance that you'll end up retiring earlier than expected, it's nice to know you can start receiving income from Social Security at age 62. It's likely to be especially welcome at such a time, because those retiring ahead of schedule will have less money socked away to support a comfortable retirement and may be in even greater need of Social Security dollars. (Indeed, a majority of elderly beneficiaries get 50% or more of their income from Social Security, while 23% of married ones and 43% of unmarried ones get fully 90% or more of their income from it, according to the SSA.)
Reason No. 2: It's (probably) a wash
Here's the main reason why many people choose to start collecting Social Security later than their full retirement age: The longer you wait, until age 70, the bigger your checks will be. For every year beyond your full retirement age that you delay, your benefits will increase in value by about 8% -- up to age 70. So if you delay from 67 to 70, you can make your checks about 24% bigger. That's a meaningful difference: If you were expecting to collect $2,000 per month ($24,000 per year), you would instead receive $2,480 per month (or nearly $30,000 annually).
Given that, it may seem like a no-brainer decision to hang on as long as you can before claiming your benefits. It's not, though. As the SSA has explained, "If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between." In other words, the system is designed so that for those who live average-length lives, it will wash in terms of total benefits received no matter when you start collecting. After all, if you delay starting to collect from ages 67 to 70, you will miss out on three years' worth of payments (albeit smaller ones) -- that's 36 payments.
Delaying starting to collect does make sense in some cases, of course. Maybe you're perfectly happy working and want to work until your late 60s or age 70 or beyond. Perhaps many people in your family have enjoyed very long lives, in which case collecting bigger checks for a longer-than-average time can be worth it. For many of us, however, delaying won't be very worthwhile.
Reason No. 3: Claiming Social Security early may help you retire early
Finally, here's a terrific reason to claim Social Security at age 62: It can help you retire early. That's true whether you need to retire early or you don't. Claiming your benefits early can be a smart move if your family tree is full of people who lived shorter-than-average lives. In case you end up being one of them, you might as well enjoy the money while you're still around. If you beat the odds and end up living a long life, you'll still be collecting benefits.
Early retirees enjoy the extra benefits of being not so old and often not so sick in their early retirement years, and thus, they can better enjoy active goals such as traveling, golfing, and gardening.
Crunch the numbers to see if retiring early would work for you. If it doesn't look like it would right now, consider beefing up your saving and investing. If you get more aggressive about it now, you may be able to shave a few years off your working life.
Since you probably have no idea how long you'll live, consider trying to retire early and starting to collect Social Security benefits as early as you can, possibly as early as age 62.
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