Age 62 is still the most popular time to claim Social Security benefits — but are most people right? Here are the pros and cons of early cash out
When the idea of retirement was first floated, most people didn’t expect to live to 70.
And while the concept of life after work has changed a lot in the nearly 140 years since the last century, the ideal retirement age is generally considered to be 65.
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That being said, what is ideal for one person may be less for another. In the United States, you can retire as early as age 62 and start claiming Social Security. And since 2021, according to Congressional Research Service, which is the most common age for new beneficiaries to retire. But is it right for you?
Choosing between packing at 62 or waiting until 65 (or even 70) is complicated and personal, but here’s what you need to know as you weigh your options.
Disadvantages of asking early
Surely after decades of working in the profession, you are wondering, “Is 62 years old if the law allows?” That’s when you factor in long-term income reductions. According to Fidelity Insurance, claimants aged 62 will see their monthly benefits reduced by about 30% compared to those who defer until full retirement age.
Depending on when you were born, the full retirement age for 100% benefits falls between 66 or 67. But if you keep it until age 70, your benefits are even higher. In fact, you can get an 8% increase for every year you wait.
Let’s say you were born in 1960. If you started receiving benefits in 2012 at age 62, your monthly income will be 30% less than your full retirement age. Instead of $1,000 per month, you’ll get $700, Social Security Administration explain.
But if the same person waited until full retirement age – now 67 – they would get the full $1,000; every year until the age of 70 increases by 8%. Monthly, that’s $1,260 for an annual total of $15,120, compared to $8,400 received at age 62.
Read more: How much is this? The average 60-year-old American keeps retirement savings — how do your nest eggs compare?
Advantages of claiming early
Of course, the above scenarios Ensure abundant health and longer life. But if you or your spouse are disabled or have serious health problems, early benefits will certainly help cover the costs.
Then there are debt question. The extra 8% a year can pale in comparison to the increased interest rates on unsecured, high-interest credit card debt as you delay repayment. Therefore, being debt-free in retirement must be weighed against any decision to delay benefits.
wisdom of social insurance collection soon also depends on type of the work you do. For example, leaving work early from an outdated assembly line is a much different matter than stick it out in a comfortable desk job. It can also provide a soothing head-start as you step away from your daily routine; lost percentage may not affect you much if you are still a part-time salaried employee.
It’s never too early to consult an expert
Before you decide which way to go, consider the wisdom of meet a financial advisor Currently.
What if you could invest your Social Security wisely and outpacing inflation? Regardless of their strategy, their job as a trustee is to always have your best interests in mind.
And at the end of the day, remember: These people are also working toward a smart retirement.
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This article is for information only and should not be construed as advice. It is provided without warranty of any kind.
