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How Much Can I Get From Social Security At 62

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Social Security: How Much Can You Get If You Retire At 62

ð´How Much Social Security $40,000 Income Retire 62

Applying for early retirement affects the amount of money you will receive each month

The average Social Security check was never intended to replace all of a retired worker’s income, so it’s important that it be part of an overall retirement plan, not your only source of income.

So, if you have a few years left to retire, it’s vital that you start saving and investing while you still have time on your side.

Receiving Benefits While Working

You can work while you receive Social Security retirement or survivors benefits. When you do, it could mean a higher benefit for you and your family.

Each year, we review the records of all Social Security beneficiaries who have wages reported for the previous year. If your latest year of earnings is one of your highest years, we recalculate your benefit and pay you any increase you are due. The increase is retroactive to January of the year after you earned the money.

How Much Money Can You Get From Social Security At 62

Pulling ones benefits out at that age is, over the long run, likely to be an expensive mistake.

Social Security normally takes effect at a persons full retirement age the age at which it is projected they will stop working and retire. This age has steadily increased since 1935, the year that Social Security was founded it is now between sixty-six and sixty-seven, depending on the year that the claimant was born.

The Social Security Administration allows Americans to claim their benefits before the FRA. However, to compensate for the extra years of payments, they also take a certain percentage of the monthly benefits away. The longer before FRA someone claims their benefits, the larger the pay cut will ultimately be.

The earliest possible date that someone can claim their Social Security benefits is at the age of sixty-two. At this age, however, the highest possible benefits one could receive per month would be around $2,300and the vast majority of benefits will be significantly lower.

It works like this. A persons Social Security benefit is calculated based on his or her income during the thirty-five most highly paid years of the persons career. A percentage of this income directly translates to ones base benefits that they would receive if they filed for Social Security at their FRA age.

Trevor Filseth is a current and foreign affairs writer for The National Interest.

Image: Reuters.

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Our reporters and editors focus on the points consumers care about most how to save for retirement, understanding the types of accounts, how to choose investments and more so you can feel confident when planning for your future.

Taking Social Security At 62

Social Security: 4 Good Reasons To File Early

Unless you meet a few clear-cut criteria, you’ll want to give the idea of taking Social Security at age 62 quite a bit of thought before you apply for benefits. Unless you have a critical illness, you’ll likely receive more income over your lifetime by starting your benefits later.

For example, let’s say that you live to age 84. You can get varying amounts, depending on whether you start Social Security at age 62, 66, or 70. To do the math, multiply your monthly benefit amount times 12 months, then multiply that by the number of years you expect to receive benefits.

  • Age 62: $835 × 12 × 22 = $220,440
  • Age 66: $1,114 × 12 × 18 = $240,624
  • Age 70: $1,470 × 12 × 14 = $246,960

You get more total income by waiting until age 70 to begin benefits. If you live longer, the age 70 plan works even better for you than the examples above.

For instance, if you start your benefits at 70 and live to age 94, you’ll receive $423,360 from Social Security. If you’d started at 62, you’d only get $320,640.

In general, the longer your life expectancy, the longer you should wait to start drawing Social Security.

Below are a few general guidelines you can use to determine whether it makes sense to take Social Security retirement benefits at age 62.

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How Day Of Birth Affects Benefit Reduction

Calculating how much your benefit will be reduced for early filing can also get a little tricky when trying to file as soon as you turn 62.

Those born after the second day of the month wont be eligible for benefits until the following month, but the SSA still views your age as 62 and 1 month thus slightly increasing your benefit payment. Those born on the second day of the month are eligible in that month for an unreduced benefit.

The weird part of the rule is for those who are born on the first of the month. Theyre deemed to have turned 62 on the last day of the prior month. Therefore, the Social Security Administration actually counts those people as 62 and 1 month in the month they attain age 62.

Heres an example of three individuals to help make sense of these weird rules around and definitions of birthdays:

Joe was born on June 1. Dan was born on June 2. Tom was born on June 3 They all had identical earnings and each has the same full retirement age benefit.

With that full retirement age benefit being $2,000, heres when they would be eligible for their age 62 benefit and how it would be calculated.

Joe, who was born on June 1, has an effective birthday of May 31. He would be entitled to benefits in June because of the rule that pushes his birthday to the previous month. The benefit would also be equal to the amount he could receive if he filed at 62 and 1 month.

What Is The Lowest Social Security Payment

Imagine that an individual who attained full retirement age at 67 had enough years of coverage to qualify for the full minimum Social Security benefit of $897. If they filed at 62, there would be a 30% reduction to benefits. This means that for 2020, the minimum Social Security benefit at 62 is $628.

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What Do You Value Most

The opportunity to experience freedom and live life on your own terms, or a higher check from Social Security?

Perhaps Im too idealistic but live in the now. Dont put off the activities that youve been dreaming of accomplishing in retirement.

Dont waste what may be your best years because you think the Social Security Administration rewards you with a higher monthly check for waiting longer.

Although I sincerely wish you a long and healthy life, applying for benefits later may be too late. You could wind up with nothing.

Benefits Rise With Cost Of Living Adjustments

Collecting Social Security at 62 How They Feel About It Now

While the Social Security benefit is a nice chunk of change, if it stayed the same over the next 30 years, its purchasing power would decline due to inflation. Thats why Social Security increases its benefit checks over time with a cost of living adjustment, or COLA.

This increase is based on one version of the Consumer Price Index, which measures how much inflation has affected the prices that consumers pay for goods and services.

Usually, the COLA is relatively small, but the increase for 2022 is 5.9 percent due to higher inflation. Heres the level of adjustments that recipients have enjoyed over the past decade.

Year

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Why You Need To Supplement Your Social Security Benefits

First off, Social Security was intended to be a supplement to people’s retirement savings. The National Institute on Retirement Security describes retirement income as a ‘three-legged stool’, consisting of Social Security, a pension plan and individual retirement savings through accounts like a 401 or an individual retirement account.

However, since the 1980s, fewer and fewer companies have been offering pension plans to their employees. The onus for saving for retirement has fallen on the employee.

And most people aren’t doing great when it comes to saving for the future: A 2020 NIRS study found that 40% of Americans rely on Social Security as their sole source of retirement income. The average annual Social Security benefit for a worker is less than $20,000, hardly enough money for most retirees to subsist on.

When it comes to saving for retirement, it’s important to start as early as you can, whether that’s through an employer-sponsored 401 or a traditional or Roth IRA. By saving for retirement early in life, you’ll reap the benefits of compound interest, which is interest earned on interest.

For example, if you started saving for retirement when you’re 25 and had investments yielding a more conservative 6% return, you would need to invest $530 per month for 40 years to reach $1 million. If you waited until you were 40 and had investments yielding a 6% return, you would need to invest $1,500 per month for 25 years to end up with $1 million.

Know Your Social Security Full Retirement Age

First things first:Determine your Social Security full retirement age. For people born between 1943 and 1954, full retirement age is 66. If your birthday falls between 1955 and 1959, it gradually climbs to 67. If you are born in 1960 or later, your full retirement age is 67.

You can claim your Social Security benefits a few years before or after your full retirement age, and your monthly benefit amount will vary as a result. More on that in a moment.

Also Check: Ssa.gov Benefits

Theres An Annual Social Security Cost

One of the best features of Social Security benefits is that the government adjusts the benefits each year based on inflation. This is called a cost-of-living adjustment, or COLA, and helps your payments keep up with increasing living expenses. The Social Security COLA is quite valuable its the equivalent of buying inflation protection on a private annuity, which can get expensive.

Because the COLA is calculated based on changes in a federal consumer price index, the size of the COLA depends largely on broad inflation levels determined by the government. In 2021, Social Security beneficiaries saw a 1.3% COLA in their monthly Social Security benefits.

The Kiplinger Letter predicted in September that the COLA for 2022 could be 6%, which would be the largest adjustment since 1982. The final COLA for 2022 will be announced on Oct. 13.

Heres what COLAs have been in other recent years:

  • 2009: 5.8%
  • 2021: 1.3%

Early Benefits Can Still Pay Off

How Much Will I Get From 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.

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How Do I Determine My Benefit Amount And File

If you have an account on the Social Security website, you can download your personal statement of benefits, which includes your estimated benefit amount at various ages. The statement also includes your lifetime wage history check this to make sure it looks accurate. If you havent established an account yet, you can do that at any time its useful to have one, since Social Security mails out paper statements only periodically these days.

The Social Security field offices are closed to the public for most routine transactions during the pandemic. If you want to claim benefits now, filing online will be your most convenient option. Services are also available via the agencys toll-free line, 800-772-1213, but be prepared for long delays.

Reasons You Should Claim Social Security Early

Learn why Social Security at 62 might not be a bad idea. Social Security 101

Your retirement planning likely includes getting income from the Social Security Administration, but when you start collecting Social Security benefits can have a big impact on your planning. The earliest you can collect is age 62, but youll get more money if you delay your benefits past your initial Social Security eligibility. If you wait until after your full retirement age to start collecting Social Security you can earn delayed retirement credits, which will increase your benefits even more.

Read: When Social Security Runs Out: What the Program Will Look Like in 2035

You might think that waiting for bigger benefits is better, but thats not always the case. There is no definitive answer to when you should collect Social Security benefits, and taking them as soon as you hit the early retirement age of 62 might be the best financial move.

Also Check: When I Can Collect Social Security

Financial Benefits Of Working Longer

Many people want to retire as soon as it is financially feasible to do so, but it’s crucial to consider the earning and investing power you may give up if you stop working full-time and take Social Security at 62. If you leave a job with good pay and benefits, it may be difficult ever to regain that level of compensation if you need or want to return to work later. Of course, not everyone can keep working, but it is something to consider if you are healthy and have the opportunity to stay in the workforce, in either a full-time or part-time capacity.

The compensation benefits of your job could also affect your Social Security. Some companies allow stock awards to continue to vest after retirement date, and even into years to follow. These payouts are considered income, and could cause your Social Security payment to be taxed, or taxed at a higher level than in years after the awards have fully distributed. Delaying Social Security payments until those other income sources have been reported for tax purposes is worth consideration.

But there’s even more to the story. As you approach retirement, you’re often at the upper end of your lifetime earnings trajectoryand of your ability to save more for retirement. In addition, if you can keep working, you can make “catch-up” contributions to a tax-deferred workplace savings plan like a 401 or 403 or a traditional or Roth IRA. Catch-up contributions allow you to set aside larger amounts of money for retirement.

Maximum Social Security Benefits Example

Why retire and collect social security at 62?

Say that someone who turned 62 in 2021 will reach FRA at 66 years and 10 months, with earnings that make them eligible at that point for a monthly benefit of $1,000. Opting to receive benefits at age 62 will reduce their monthly benefit by 29.2% to $708 to account for the longer time they could receive benefits, according to the Social Security Administration . That decrease is usually permanent.

If that same person waits to get benefits until age 70, their monthly benefit increases to $1,253. The larger amount is due to the delayed retirement credits earned for the decision to postpone receiving benefits past FRA. In this example, that higher amount at age 70 is about 77% more than the benefit they would receive each month if benefits started at age 62, or a difference of $545 each month.

Of course, the best time for someone to start taking Social Security benefits depends on a variety of factors, not just the dollar amount of the benefit. Things such as current income and employment status, other available retirement funds, and life expectancy must also be factored into the decision.

The Social Security Administration has several calculators to help you estimate your benefits.

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Something Else To Remember

If you decide to claim at age 62, then you’ll need to be aware of Social Security’s income limit.

Social Security allows recipients to continue working while collecting Social Security income, but if you earn above a set limit every year, you’ll have some of your Social Security benefits held back and paid out later.

In 2018, if you’re younger than full retirement age, you can earn up to $17,040 per year without any reduction in Social Security income. However, once your income exceeds that amount, Social Security will hold back $1 for every $2 earned.

This means that if you decide to collect benefits at age 62 this year and continue working, you might not receive all the benefits you expect. Don’t worry, though. Any money held back does go back into the formula used to calculate your full retirement age benefit and so this reduction will increase your future Social Security income.

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The Age At Which You Claim Could Have A Major Impact On The Rest Of Your Retirement

As you’re preparing for retirement, one of the most important decisions you’ll make is what age to begin claiming Social Security benefits. The earliest you can file for benefits is age 62. That’s also the most popular age to begin claiming, with around 35% of men and nearly 40% of women taking benefits at 62, according to a report from the Bipartisan Policy Center.

There’s not necessarily a right or wrong age to file for Social Security, but there are advantages and disadvantages. There are a couple of scenarios where you may want to claim as early as possible, and one situation where you might be better off waiting a few years.

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