Should I Draw Social Security At 62 Or 66

Fundamental takeaways

If you claim Social Security at age 62, rather than wait until your full retirement age (FRA), yous can wait up to a 30% reduction in monthly benefits.
For every twelvemonth y'all delay claiming Social Security past your FRA up to age seventy, you become an 8% increment in your benefit. So, if you lot tin afford it, waiting could be the amend option.
Health status, longevity, and retirement lifestyle are 3 variables that tin play a role in your decision when to claim your Social Security benefits.

When it comes to Social Security, it tin be tempting to take the money and run as shortly as yous're eligible—typically at historic period 62. After all, you've probable been paying into the system for all of your working life, and y'all're set to receive your benefits. Plus, guaranteed monthly income is nice to have.

Health status, longevity, and retirement lifestyle are 3 key factors that tin can play a role in your decision when to claim your Social Security benefits. You lot may non be able to predict your futurity wellness condition, given the uncertainties that many people are dealing with during the COVID pandemic, just you lot tin rely on the simple fact that if you merits early versus later, y'all will likely accept lower benefits from Social Security to assist fund your retirement over the next xx-30+ years.

If y'all start taking Social Security at age 62, rather than waiting until your total retirement historic period (FRA), you tin can expect up to a xxx% reduction in monthly benefits with bottom reductions as you approach FRA. Remember, FRA is no longer age 65: It now ranges from 66 to 67, depending on your date of nascence (see your total retirement age). And your annual cost-of-living adjustment (COLA) is based on your do good. So if y'all begin claiming Social Security at 62 and start with reduced benefits, your COLA-adjusted benefit will exist lower too.

Waiting to merits your Social Security benefit volition issue in a higher benefit. For every year you delay your claim past your FRA, you go an 8% increase in your benefit. That could be at to the lowest degree a 24% higher monthly benefit if you delay claiming until age 70. But, make certain to evaluate your decision based on how much you've saved for retirement, your other sources of income in retirement, and your expectations for longevity.

While many people could benefit from waiting to age lxx to have Social Security payments, others may need this source of guaranteed income sooner to aid pay their bills, or they may anticipate not living long plenty to reap the rewards of delaying.

The downside of claiming early: Reduced benefits

Consider the following hypothetical example. Colleen is 62 equally of 2022. If Colleen waits until historic period 67 (her FRA) to collect, she will receive approximately $ii,000 a month. However, if she begins taking benefits at age 62, she'll receive but $1,400 a calendar month. This "early retirement" penalty is permanent and results in her receiving up to 30% less year later twelvemonth.

All the same, if Colleen waits until age seventy, her monthly benefits volition increase another 24% over what she would receive at her FRA, to a total of $2,480 per month.^ane If she were to live to age 89, her lifetime benefits would exist nearly $112,000 more than, or at least 24% greater, because she waited until age 70 to collect Social Security benefits.² (Note: All figures are in today's dollars and before tax. The actual do good would be adapted for inflation and would possibly be subject field to income taxation.)

Spouses and Social Security

You can claim Social Security benefits based on your spouse's work record. If claiming spousal benefits provides more, claiming earlier your FRA on a spouse'due south record means you'll lose even more claiming on your own record—the benefit reduction for a spouse is up to 35% while the reduction for challenge your ain do good is upward to 30%. For instance, if you're the spouse of Colleen in the above instance and you are the aforementioned age, you'd be eligible for merely $650 a calendar month at age 62—35% less than the $k a month you would become at your FRA of 67.

Your conclusion to have benefits early could outlive you. If you were to dice before your spouse, they would be eligible to receive your monthly amount as a survivor benefit—if it'southward higher than their own amount. But if yous accept your benefits early, say at age 62 versus waiting until historic period lxx, your spouse'south survivor Social Security benefit could be upwards to 30% less for the residual of their lifetime.

Bridge to Medicare at age 65

Call back that while you lot are eligible for reduced Social Security benefits at 62, you won't exist eligible for Medicare until age 65, so y'all will probably have to pay for private wellness insurance in the meantime. That can consume upward a large chunk of your Social Security payments.

Read Viewpoints on Fidelity.com: Your bridge to Medicare

Financial benefits of working longer

Many people want to retire every bit soon equally it is financially feasible to practise so, but it's crucial to consider the earning and investing power you may requite up if you cease working total-time and take Social Security at 62. If you leave a task with expert pay and benefits, it may be difficult ever to regain that level of bounty if you demand or want to return to work later. Of course, not everyone tin can keep working, only 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 as well affect your Social Security. Some companies allow stock awards to continue to vest (pay out, and as a effect, incur income taxes) 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 afterward the awards take fully distributed. Delaying Social Security payments until those other income sources have been reported for tax purposes is worth consideration.

Tip: Women often live longer than men, and they're more probable to depend on one income when they're older. Don't make the mistake of coupling your determination to leave the workforce, particularly during COVID, with your Social Security claiming strategy. Remember, by the time yous get into your 80s, you have fewer financial options, so don't leap at the first opportunity to claim Social Security at age 62 merely because you may want to quit your current chore.

But in that location's even more to the story. Every bit you approach retirement, you lot're often at the upper end of your lifetime earnings trajectory—and of your power to salvage more for retirement. In add-on, if you lot can proceed working, y'all can brand "catch-up" contributions to a tax-deferred workplace savings plan like a 401(k) or 403(b) or a traditional or Roth IRA. Catch-up contributions allow you to prepare aside larger amounts of money for retirement.

Remember, if y'all make up one's mind to stop working at 62, you lot will cease revenue enhancement-advantaged saving opportunities, and if you decide to claim Social Security early on, you volition cap your Social Security benefits throughout your retirement—and you may need to begin to draw down your savings earlier than y'all want.

When y'all gene in longevity, health care, and the toll of your expected lifestyle in retirement, your decision on whether or not to claim Social Security at age 62 may become clearer.

Read Viewpoints on Fidelity.com: Social Security tips for working retirees

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