62 vs. 70: When Can You Start Collecting Social Security?

Did you know that the age at which you start collecting Social Security can significantly impact your retirement income? While you can begin receiving benefits as early as 62, waiting until 70 could mean a much bigger monthly check. So, when is the best time to start? Let’s break it down so you can make the best decision for your financial future.

What Age Can You Start Collecting Social Security?

You can start collecting Social Security benefits as early as age 62, but your monthly payments will be reduced compared to waiting until your full retirement age (FRA) or even age 70. Here’s a quick overview:

• Age 62: The earliest you can claim benefits, but you’ll receive a reduced amount, about 25-30% less than your full benefit.
• Full Retirement Age (FRA): This is between 66 and 67, depending on when you were born. At FRA, you get 100% of your benefit amount.
• Age 70: The maximum benefit age. If you wait until 70, your monthly payments could be up to 77% higher than if you had claimed at 62.

The Pros and Cons of Collecting Social Security at 62

Investing Early Benefits to Bridge the Gap

Some people choose to take Social Security at 62 and invest the money to compensate for the lower monthly payments. If invested wisely, the returns could potentially offset the benefit reduction over time. For example:

• If you claim at 62 and invest your monthly benefits in a diversified portfolio, your returns could grow over the years, providing a financial cushion later in retirement.
• Assuming an average annual return of 6-8%, invested funds could compound significantly over a decade or more.
• This strategy works best for those who have other sources of income and do not need to rely entirely on Social Security for living expenses.

However, investing always comes with risk, and market fluctuations could impact returns. It’s crucial to have a solid financial plan and consider working with a financial advisor before relying on this approach.

The Pros and Cons of Waiting Until 70

Which Age is Best for You?

The best age to start collecting Social Security depends on your financial situation, health, and retirement goals. Here are some factors to consider:

• Your health and life expectancy: If your family has a history of longevity, waiting may be beneficial.
• Your need for income: If you need the money sooner, claiming early might be the best choice.
• Other retirement savings: If you have other income sources, delaying Social Security can maximize your benefits.
• Your employment status: If you plan to keep working past 62, claiming early could result in temporary benefit reductions.

What Happens If You Change Your Mind?

If you start collecting Social Security and later decide it was too early, you may have options:

• Withdraw your application: If it's been less than 12 months, you can cancel your claim, repay benefits received, and apply again later.
• Suspend benefits at FRA: If you reach full retirement age and want to earn higher benefits, you can suspend payments and restart them later at a higher rate.

Final Thoughts

Deciding when to start collecting Social Security is a big financial decision. Claiming at 62 means immediate income but reduced benefits, while waiting until 70 maximizes your monthly check. Consider your personal circumstances, health, and financial needs before making a choice.

Want to estimate your benefits? Use the Social Security Administration’s calculator at SSA.gov to compare different claiming ages and see what works best for you!

FAQs

1. Is it better to draw Social Security at 62 or 67?

It depends on your financial needs and life expectancy. Claiming at 62 provides immediate income but results in permanently reduced benefits, while waiting until 67 (or FRA) ensures you receive your full benefit amount. If you can afford to wait, delaying may lead to higher lifetime benefits.

2. Can I collect Social Security at 62 and still work full-time?

Yes, but your benefits may be temporarily reduced if you earn above the earnings limit ($22,320 in 2024). Once you reach FRA, your benefits are no longer reduced, regardless of income.

3. At what age do you get 100% of your Social Security?

You receive 100% of your benefit at your full retirement age (FRA), which is between 66 and 67, depending on your birth year.

4. At what age is Social Security no longer taxed?

Social Security benefits may always be subject to taxation, depending on your total income. However, some states do not tax Social Security, and for federal taxes, if your income is below certain thresholds, you may not owe taxes on your benefits.

5. Does Social Security count as income?

Yes, Social Security is considered income, and it may be taxable depending on your combined income from other sources. If your total income exceeds certain limits, up to 85% of your benefits could be taxed.