Claiming Social Security at 62? You may regret this | Business news

One day, you’ll likely be among the tens of millions of Americans collecting Social Security (65 million as of 2021). How much will you collect? Well, the answer to that question is different for each of us, mostly depending on how much we’ve earned in our working lives, and also largely on when we start receiving benefits.

We can start collecting as early as age 62, and most people start collecting at age 62 or 63. However, there are good reasons not to do this, as well as some arguments for it. Here’s a closer look at why you might regret claiming at age 62, followed by a few reasons why it might make sense for you.

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1. You’ll get smaller checks

Most of us have “full retirement age” when we can start collecting the full benefits we’re entitled to based on our earnings history, and for most of us that’s age 66 or 67. For each year until full retirement age that you receive your benefits, they will be reduced Specifically, you’ll receive about 70% to 75% of your full benefits if you start collecting at age 62.

It’s not perfect, but it’s not as bad as it sounds – after all, while the checks may be smaller, you’ll collect a lot more in total. For those living the average length of time, there will be little difference in the total amount of benefits they receive, regardless of when they start receiving them.

2. An early declaration can spoil a smart strategy of the spouses

However, you should consider the bigger picture before deciding when to start collecting your benefits. For example, married people can get more benefits from Social Security by coordinating when they each start. While you’ll both enjoy two welfare checks each month, it’s likely that one of you will be gone at some point – and then only one check will arrive. The rules allow you to collect more benefits. Therefore, it is worth trying to make at least one of your checks as large as possible.

A good way to maximize your benefits is to delay collecting them until age 70. If the higher-earning spouse stays until age 70, it can greatly help the lower-earning spouse if he or she is the surviving spouse in the future.

3. If you plan to continue working, your benefits may be reduced

Another consideration is if you I plan to continue working when you are 62 years old. If you start collecting Social Security and also work, if you earn more than a certain amount, the Social Security Administration (SSA) may reduce your benefits. As it explains:

If you don’t reach full retirement age for the entire year, we deduct $1 from your benefits for every $2 you earn over the annual limit. In 2022, that limit is $19,560.

In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above the other limit. In 2022, that limit on your earnings is $51,960. We only count your earnings for the month before you reach full retirement age, not your full year’s earnings.

It may sound scary, but once you reach full retirement age, the SSA will stop withholding your benefits and recalculate your benefits based on what was withheld. That way, you’ll get back at least some of the withheld payments. However, if you plan to continue working much longer, it’s best to simply not start collecting these benefits early.

On the other hand…

Despite the above reasons, there are there is here are a few reasons why you might want to start collecting your own Social security benefits early. For example:

  • You don’t know how long you will live. If you end up waiting until age 70 to collect money and then die at age 72, you won’t get much benefit from Social Security. Think a little about your health and how long your relatives lived. If you have a good chance of living a very long life, it’s best to delay as long as possible.
  • Maybe you can afford to retire early. Many people start collecting benefits early because they have to. Maybe they lost their job or for whatever reason just need that income asap. Many who can afford to delay collecting benefits should delay, but if you’ve saved and invested well for retirement and can afford to delay early, starting to collect early may make sense.

Deciding when to start collecting Social Security benefits will be different for most of us. Take the time to learn more and think things through before taking any action so you can get the most out of the program.

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