Thursday, May 19, 2022

Can You Start Drawing Social Security At 62

Don't Miss

Retiring At : Pros And Cons

Is 62 the best age to start drawing Social Security?

Making the decision between officially retiring with social security at age 62 or another older age shouldnt be taken lightly. Planning ahead and making the decision based on your retirement goals and health will help you make the smartest financial decision.

Lets review the upside to starting early.

Are There Any Government Benefits For Seniors Over 65

1 Supplemental Security Income is available for seniors over the age of 65 with disabilities and limited resources. 2 Social Security Disability Insurance is for anyone suffering from a disability who has worked in jobs covered by Social Security. 3 Survivor Benefits are benefits paid to the widows or survivors of a worker who has died.

When Can I Draw My Social Security Retirement Benefits

To draw full retirement benefits, the following Social Security Administration age rules apply: Remember that while you can begin drawing Social Security retirement benefits at age 62, your benefits will be 25 percent less than what they will be if you wait until your full retirement age as shown above.

Don’t Miss: Monthly Social Security Check

What If I Delay Taking My Benefits

If you retire sometime between your full retirement age and age 70, you typically earn a “delayed retirement” credit . For example, say you were born in 1955 and your full retirement age is 66 and 2 months. If you started your benefits at age 68, you would receive a credit of 8% per year multiplied by approximately two . This makes your benefit ~15% higher than the amount you would have received at age 66.

That higher baseline lasts for the rest of your retirement and serves as the basis for future increases linked to inflation. While it’s important to consider your personal circumstancesit’s not always possible to wait, particularly if you are in poor health or can’t afford to delaythe benefits of waiting can be significant.

If you decide to wait past age 65, you may still need to sign up for Medicare. In some circumstancesyour Medicare coverage may be delayed and cost more if you do not sign up at age 65.

Effect of late retirement on benefits

1.Represents Full Retirement Age based on DOB Jan. 2, 1955

2.PIA = The primary insurance amount is the basis for benefits that are paid to an individual

To review your situation, your annual Social Security statement will list your projected benefits at age 62, full retirement age, and age 70, assuming you continue to work and earn about the same amount until age 62, full retirement age, or age 70 before retiring. If you need a copy of your annual statement, you can request one from the Social Security Administration .

What Is The Future Of Social Security

What Age Should You Start Drawing Social Security ...

If you’re skeptical about the future of Social Security or wary of potential changes such as means testingwhich could reduce or eliminate benefits for the wealthy, or an increase in the full retirement ageyou may be tempted to start benefits early, under the assumption that it’s better to have something than nothing. The 2021 annual report from the Social Security Trustees, released in August 2021, projects that the Social Security Trust Fund has enough resources to cover all promised benefits until 2034. Then, absent a change from Congress, the trustees project that benefits would need to be cut for all current and future beneficiaries to about 78% of scheduled benefits. The 2021 report includes the trustee’s best estimates of the impact from the pandemic, which were not reported on last year.

Over the longer term, changes such as later benefit dates or means testing may be considered.

In any situation, if you’re particularly concerned about the future prospects for Social Security, that’s a good reason to save more, and earlier, for your retirement.

Also Check: How Much Will I Get Social Security

What If I Take Benefits Early

If you choose to receive your Social Security check up to 36 months before your full retirement age, be aware that your benefit is permanently reduced by five-ninths of 1% for each month.

If you start more than 36 months before your full retirement age, the benefit is further reduced by five-twelfths of 1% per month, for the rest of retirement.

For example, let’s assume that you stop working at age 62. If your full retirement age is 66 and 2 months you elect to start benefits at age 62, the reduced benefit calculation is based on 50 months. This means that the reduction for the first 36 months is 20% and 5.83% for the remaining 14 months. Overall, your benefits would be permanently reduced by 25.83%.

Effect of early retirement on benefits

1.Represents Full Retirement Age based on DOB Jan. 2, 1955

2.PIA = The primary insurance amount is the basis for benefits that are paid to an individual

You Can Find Estimated Benefits Online

You can use the SSAs Retirement Benefits Estimator to get an estimate of how much your monthly Social Security benefit will be if you start drawing benefits at age 62, your full retirement age or at age 70.

Want to find out your monthly benefit if you begin drawing benefits at another age between 62 and 70? Use my Social Security Retirement Calculator to find out what your monthly benefit would be at a specific age. The amount shown is an estimate based on your earnings. Once you apply for benefits, the SSA will give you an exact monthly figure.

Find out: 6 Surprise Costs that Can Drain Retirement Savings

Read Also: How To Calculate Social Security Benefits At Age 65

There Are Social Security Survivor Benefits For Spouses And Children

If your spouse dies before you, you can take a Social Security survivor benefit. However, that won’t be in addition to your own benefit. You must choose one or the other. If you are at full retirement age, that benefit is worth 100% of what your spouse was receiving at the time of his or her death .

A widow or widower can start taking a survivor benefit at age 60. However, the payment will be reduced because it’s taken before full retirement age. If you remarry before age 60, you are not eligible for a survivor benefit. If you remarry after age 60, you may be eligible for a survivor benefit based on your former spouse’s earnings.

Eligible children who are under age 18 or were disabled before age 22 can also receive a Social Security survivor benefit. It would be worth up to 75% of the deceased’s benefit.

Who’s The Higher Earner

Collecting Social Security at 62 How They Feel About It Now

Compare the estimates for you and your spouse, and pay special attention to the difference between your estimates. The higher earner is the spouse with the larger primary insurance amounts .

When you’re deciding who will collect first and who should wait, consider having the lower earner collect first and having the higher earner wait. Over time, the higher earner’s increases will be worth more than the lower earner’s increases.

And if one spouse’s estimates are more than twice as high as the other’s, it might make sense for both of you eventually to collect on the same spouse’s earnings record.

In that situation, the spouse with the lower benefits can claim first based on his or her own earnings record and apply for spousal benefits later when the spouse with the higher benefits starts to collect.

The longer the spouse with the higher benefit waits to start collecting, the higher benefits will be for both spouses. Delaying the higher earning spouse’s benefits could also eventually increase the other spouse’s survivors benefits.

Also Check: Social Seecurity

Earnings Limit For Social Security Disability Benefits

So far we have been mainly focused on income limits for those on Social Security retirement benefits. Many people on Supplemental Security Income and SSDI wonder how work affects your benefits as well. In fact, they often ask, How much can I earn while on Social Security Disability in 2021? When it comes to SSI and SSDI, the rules are a little different. Receiving SSDI or SSI benefits means that a person has been found to be disabled and unable to perform substantial gainful activity. This essentially means that they are unable to perform any type of full-time work and thus earn an income. For those qualifying for SSDI or SSI benefits, an earner can make no more than $1,310 per month. Any income above this amount, even from self-employment, will make them ineligible to receive SSI or SSDI benefits.

Remember that those receiving SSI or SSDI might have to worry about Social Security taxes on their Social Security earnings as well. Since the income limits and average benefits are lower, most people receiving disability benefits will not be required to pay any taxes on their benefits. Remember that the Social Security tax limits are adjusted almost every year too, so make sure that you are aware of the current rules. Recipients of SSI and SSDI are also automatically enrolled in Medicare after a certain period of time.

Working While Receiving Benefits

You may work after you start receiving benefits, which could mean a higher benefit for you in the future. We may withhold some of your benefits if you earn more than the yearly earnings limit. Sometimes people who retire in mid-year already have earned more than the annual earnings limit. However:

  • We have a special rule that applies to earnings for one year, usually the first year you begin receiving benefits. This means we cannot withhold benefits for any month we consider you retired, regardless of your yearly earnings.
  • After you reach full retirement age, we will recalculate your benefit amount to take into account any months you did not receive benefits because your earnings were too high.

Don’t Miss: What Age Can I Claim Social Security

You Need To Pay Down Debt

There are some debts you need to tackle before you retire. If you have high-interest debt, claiming Social Security early can help you pay the debt down. Depending on the interest rate youre paying, the 8% yearly boost to your benefits that you receive for each year you wait past full retirement age might not be worth the increased monthly benefit. Using the early benefits to reduce or eliminate your debt earlier could mean youll be able to keep more of your benefits in the future.

Save: What Is a Roth IRA?

Early Benefits Can Still Pay Off

Is 62 the Best Age to Start Drawing Social Security?

However, taking early benefits can still pay off despite the reduced monthly check. But youll want to be sure you budget for a reduced benefit.

No one can predict how long youll live, but if youre facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate, Neiser says.

Married women are also good candidates for claiming early benefits because they are likely to outlive their husbands. Those widows then become eligible to receive the greater of either their benefit or their late husbands benefit.

However, this scenario works only if the husband does not claim his benefits early. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives. So youll want to calculate how filing early will affect your spousal benefit here.

You May Like: Social Securty Online

Tips For Figuring Out Your Full Retirement Age

Depending on your area of work, its likely that your employers retirement age and the Social Security Administrations full retirement age are different. The universal milestone used to be 65, but the government increased it beginning with people born in 1938 or later. The age gradually increases until it reaches 67 for individuals born after 1959.

For example, if you were born in 1955, the SSA says your full retirement age is 66 and two months. You would be able to retire from work and claim your benefits now at age 62, but you wont receive full benefits until you reach the SSAs specified retirement age.

This is important because someone born in 1955 who is eligible to receive $1,000 a month at full retirement age will only get $741 a month if they claim those benefits at age 62. Thats a 26 percent reduction just for collecting early.

Of course, some people just cant wait. Perhaps theyre in very poor health and unlikely to live long in retirement or they must collect these payments to survive and make ends meet.

If youre not sure what your full retirement age is, you can use this SSA calculator to help you figure it out.

How Much Will I Get If I Retire At 62

If you begin claiming at 62, youll get only 70% of your standard benefit if your FRA is 67 or 75% if your FRA is 66. Every month you delay benefits increases your checks slightly until you reach the maximum benefit at 70. This is 124% of your standard benefit if your FRA is 67 or 132% if your FRA is 66.

Don’t Miss: How Are Social Security Benefits Determined

Youre Planning Your End

Your Social Security benefits stop paying at your death, so if you die prior to collecting benefits, youll have missed out on benefits entirely. You need to figure out how to maximize your Social Security income, instead. For example, say youre planning to wait until age 70 so you can claim the larger monthly benefit. If you die right before your 70th birthday, you wont receive any benefits. Its very difficult to predict how long youll live, especially if youre in good health now. However, if you are suffering from a terminal or serious illness, the increased monthly benefit for delaying Social Security might not be worth it.

Read More: Costco and 23 More Companies With Surprisingly Great 401 Plans

When To Start Drawing Social Security At Full Retirement Age

New tool can help you decided when to start drawing Social Security

You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. Is it better to take Social Security at 62 or wait?

Also Check: Social Secuiry

You Have No Other Steady Source Of Income

If you reach age 62 and are let go from your job, you may have no choice but to file for benefits in the absence of outside income to pay your bills.

Granted, you do have the option to charge expenses temporarily on a credit card while you look for new work or to take out another type of loan. But doing so is risky, because unfortunately, finding a job can be difficult when you’re older, what with age discrimination rampant in the workforce. The longer you carry any sort of debt, the more interest you accrue on it. A better bet may be to file for Social Security as soon as you can to get your hands on the money you need to keep functioning. That way, you’ll avoid debt, and if you do find a job shortly after claiming benefits early, you can undo them as discussed earlier and file again later to avoid a lifelong reduction.

Many seniors file for Social Security at 62 simply because they can. Although that’s a decision that can backfire, there’s nothing wrong with claiming benefits at 62 if you have a well-thought-out reason for doing so.

The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

Offer from the Motley Fool:The $16,728 Social Security bonus most retirees completely overlook

What Happens If You Claim After Your Fra

If you wait until your age 70 to start claiming benefits, then youll get an extra 8% per yearor, in total, 132% of your primary insurance amount for the rest of your life. Claiming after you turn 70 doesnt increase your benefits further, so theres no reason to wait longer than that.

The longer you can afford to wait after age 62 , the larger your monthly benefit will be. Nevertheless, delaying benefits doesnt necessarily mean that youll come out ahead overall. Other factors should be considered, including your expected longevity and whether you plan to file for spousal benefits. You should also consider the tax, investment opportunity, and health coverage implications.

Don’t Miss: Social Sevurity

At What Age Is Social Security No Longer Taxed

At 65 to 67, depending on the year of your birth, you are at full retirement age and can get full Social Security retirement benefits tax-free. However, if youre still working, part of your benefits might be subject to taxation. The IRS adds the figures for your earnings and half your Social Security benefits.

Thinking Of Taking Social Security At 62

Social Security News: Maybe Waiting To Start Drawing ...

Keeping tabs on your expected social security benefit and planning ahead will go far in maximizing the value of this government-run income insurance plan. Depending on your income situation in your 60s, deciding to draw your benefit at the earliest age could be smart if you plan, prepare, and execute a sound financial strategy. This is doubly true in the context of how it might affect your taxes.

So far as my father and his plans, Im delivering the research Ive done to help him make a decision. I dont think its a very clear cut decision either way, and itll likely affect what decision my mother makes as well. Shes a bit younger than him, but is reaching the age 62 threshold.

What Id most like to convey is that financially it seems like a bit of a toss-up in the big picture. What I want to discourage is them working longer partly to increase their social security benefit. I think they believe they have enough.

If youre thinking about taking social security at 62, I hope this has been a productive review of the pros and cons. For readers closer to my own age, I dont think its smart to not plan in advance for these sorts of decisions. While I suspect the age threshold will increase , its still only about 25 years away for me. Thats not all that long!

Also Check: How Do I Get My Son’s Social Security Number

More articles

Popular Articles