Comparing the Financial Aspects
When facing the choice between an early retirement at 62 and a delayed one at 70, the most immediate and significant impact is on your Social Security benefits. This decision sets the foundation for your financial future throughout your senior years.
The Case for Retiring at 62: Early Access and Freedom
For some, the appeal of leaving the workforce at 62 is about maximizing the number of years they have to enjoy retirement. This decision can be ideal if you have substantial savings outside of Social Security, if your health is a concern, or if your career has become a source of burnout. By retiring early, you gain the freedom to travel, pursue hobbies, or spend more time with family while you are still healthy and active.
However, the financial trade-off is significant. For those with a full retirement age (FRA) of 67, claiming benefits at 62 results in a monthly payment that is reduced by 30%. This reduction is permanent and will affect your income for the rest of your life. While you receive benefits for a longer total period, the reduced amount can be a major disadvantage, especially with rising costs of living. Another critical consideration is health insurance, as you will not be eligible for Medicare until age 65. This means you will need to fund private health insurance for three years, which can be costly.
The Case for Retiring at 70: Maximized Benefits and Security
Delaying retirement until age 70 offers the most powerful financial incentive: maximized Social Security benefits. For each year you delay claiming past your FRA (up to age 70), your benefit increases by approximately 8%. This delayed retirement credit can result in a monthly payment that is significantly higher—as much as 24% more than your FRA benefit. For a worker with average earnings, this can amount to tens or even hundreds of thousands of dollars more over a long retirement.
Waiting until 70 also gives your personal investments more years to grow and compound without being drawn down. This creates a larger nest egg that has to last for a shorter period, greatly improving your financial security. Furthermore, staying employed often means continued access to more affordable, employer-sponsored health insurance until you are eligible for Medicare at 65. The trade-off, of course, is that you have fewer total years in retirement to enjoy your newfound freedom.
A Side-by-Side Comparison
To highlight the differences, consider this comparison based on an individual with a full retirement age of 67.
| Aspect | Retire at 62 | Retire at 70 |
|---|---|---|
| Monthly Social Security Benefit | Permanently reduced by 30% compared to FRA. | 24-32% higher than FRA benefit (depending on FRA). |
| Total Retirement Years | More years to enjoy an active retirement. | Fewer years of collecting benefits. |
| Health Insurance Coverage | Must secure private insurance (ACA, COBRA) until Medicare eligibility at 65. | Often covered by employer insurance until Medicare eligibility at 65. |
| Impact on Savings | Savings drawn down earlier and for a longer period. | More years for investments to grow, shorter withdrawal period. |
| Spousal/Survivor Benefits | Higher-earning spouse delaying can result in higher survivor benefits. | Higher-earning spouse delays, maximizing lifetime benefits for the household. |
| Workplace Impact | Potential for less burnout and earlier escape from stressful jobs. | Continued exposure to work stress, but potential for higher late-career earnings. |
Additional Factors to Consider
Beyond the raw numbers, your personal circumstances play a crucial role in this decision. Your health and family history of longevity are important variables. If you have a serious health condition that may shorten your lifespan, claiming earlier might be the better option to ensure you receive benefits for as long as possible. If you are in excellent health, waiting until 70 to maximize your benefits could be a powerful hedge against running out of money later in life.
Your spouse's financial situation should also be part of the conversation. Maximizing the benefit of the higher earner can lead to a larger survivor benefit, providing greater security for the remaining partner if one passes away. Inflation is another risk to consider. The delayed retirement credits provide a guaranteed inflation-adjusted increase, which is a powerful tool against the erosion of purchasing power over time.
For more detailed information on benefit calculations and eligibility, the official Social Security Administration website is an indispensable resource. The Social Security Administration
Conclusion: No One-Size-Fits-All Answer
Ultimately, there is no single best answer to the question of whether it is better to retire at 62 or 70. The optimal choice is a personal one, requiring careful consideration of your financial readiness, health, lifestyle desires, and family needs. For some, the freedom of an early retirement, even with reduced benefits, is priceless. For others, the peace of mind and enhanced financial security that a larger, lifelong benefit provides is the priority. The key is to run the numbers, consider your personal circumstances, and make an informed decision that aligns with your vision for retirement.
