Why I may start receiving Social Security at age 62?
Many pundits suggest waiting until age 70 to receive the maximum payout possible. Financially speaking, that may be the right answer, but other factors need to be equally considered. Focus is often on the so called break-even age, the point at which the total lifetime benefits from claiming Social Security at age 70 equal those from claiming at age 62. This is an important factor in retirement planning, especially when factoring in longevity, spousal benefits, and opportunity cost.
First, the financial argument and the break-even analysis at age 62 vs. age 70.
Claiming at 62, the earliest allowable age: you receive reduced monthly benefits (about 70–75% of your full retirement benefit).
Claiming at 70, the oldest allowable age: you receive delayed retirement credits, increasing your monthly benefit by up to 8% per year until the full retirement age of 70 (FRA), resulting in about 132% of your full benefit.
No brainer, right?
Maybe not. Let’s look at the typical break-even age.
• The break-even point is usually between ages 78 and 82, depending on your earnings record, inflation assumptions, and whether you continue working.
• If you live past ~80, you’ll generally receive more total benefits by waiting until 70.
• If you die before ~78, claiming early at 62 yields more lifetime benefits.
In addition to longevity, spousal benefits, and opportunity cost, there is one more factor not as widely discussed, desired lifestyle. Many people wait until age 70 so they will have more money to enjoy in retirement. But in some cases, people begin to experience health issues in their 70s and 80s which may limit their ability to enjoy the lifestyle they hoped for in retirement. So, maybe it’s better to start taking Social Security benefits at a younger age, even at age 62, the youngest age allowable to receive benefits. You may not receive as much as if you waited, but you may be in better shape and more able to enjoy it!
Of course, everybody’s circumstances are different so there is never a one size fits all scenario.
Pax et Bonum!
Proverbial Living 