As you approach your 62nd birthday, a pivotal moment in your financial life is on the horizon. While there is no requirement to take action, this milestone is your first opportunity to claim Social Security retirement benefits, which can have lifelong financial consequences. A thorough review of your financial situation, future needs, and health insurance options is vital before making a decision.
Reviewing Your Social Security Options at Age 62
The most significant decision you face is when to start receiving your Social Security benefits. Claiming benefits at age 62 is an option, but it comes with a trade-off: a permanent reduction in your monthly benefit amount compared to what you would receive at your full retirement age (FRA). For anyone born in 1960 or later, FRA is 67, and claiming at 62 results in a permanent 30% reduction.
Access your Social Security Statement
The first step to understanding your options is to create a personal “my Social Security” account online. This account provides secure access to your Social Security Statement, which includes:
- Your personal earnings record.
- Estimates of your retirement, disability, and survivor benefits.
- Projections of your monthly benefits at various ages, including 62, your FRA, and 70.
Understand the early claiming vs. delaying debate
The core of your decision hinges on your personal circumstances, including your health, expected longevity, and immediate financial needs. Waiting to claim your benefits until your FRA secures 100% of your earned benefit, and delaying even further until age 70 can increase your monthly benefit by up to 8% for each year you wait beyond your FRA.
Early Claiming (at 62)
- Provides immediate income if you need it.
- May be beneficial if you have a shorter life expectancy.
- Allows you to access your benefits sooner to cover immediate expenses.
Delaying Your Claim
- Results in a higher monthly payment for the rest of your life.
- Maximizes lifetime benefits if you have a longer life expectancy.
- Can provide higher survivor benefits for a spouse.
How working affects your benefits
If you plan to work while collecting Social Security benefits before your FRA, you must be aware of the annual earnings limit. For 2025, if you are under your FRA for the entire year, the limit is \$23,400. The Social Security Administration (SSA) will temporarily withhold \$1 in benefits for every \$2 you earn over this limit. In the year you reach FRA, the limit is higher (\$62,160 for 2025), and the withholding rate is \$1 for every \$3 earned over the limit. This withheld amount is not lost but is credited back to you in the form of higher monthly payments once you reach your FRA.
Planning Your Healthcare Coverage Until Medicare
One of the most critical considerations for retiring at 62 is the healthcare coverage gap until Medicare eligibility begins at age 65. This requires careful planning to avoid expensive out-of-pocket costs.
Here are some common options for bridging the gap from 62 to 65:
- COBRA: This federal law allows you to continue your health coverage from your former employer for a limited period, typically 18 months, by paying the full premium plus an administrative fee. Since this will not cover the entire gap, it should only be considered a short-term solution.
- Affordable Care Act (ACA) Marketplace: HealthCare.gov is a federal marketplace where you can purchase private health insurance. Depending on your income, you may be eligible for tax credits that lower your monthly premiums.
- Spouse’s Health Plan: If your spouse is still working and has health insurance, you may be able to be added to their plan. Losing your job-based coverage qualifies you for a special enrollment period to join their plan.
- Private Health Insurance: You can purchase a private health insurance plan directly from an insurance company. The cost and coverage will vary significantly based on your needs and location.
Comparison of Social Security Claiming Strategies
| Feature | Claiming at 62 (Early Retirement) | Claiming at Full Retirement Age (FRA) | Claiming at 70 (Delayed Retirement) |
|---|---|---|---|
| Monthly Benefit | Reduced by up to 30% for life. | 100% of your Primary Insurance Amount (PIA). | Increases by up to 8% for each year past FRA, up to age 70. |
| Lifetime Benefit | Potentially higher if you have a shorter-than-average life expectancy. | A baseline for comparison. Total lifetime payout is based on how long you live. | Potentially the highest total payout if you have an average or longer-than-average life expectancy. |
| Working & Earnings | Subject to an annual earnings limit. Benefits are temporarily reduced if you exceed it. | No earnings limit. You can work and receive full benefits simultaneously. | No earnings limit. Continued work may even increase your benefit by replacing a lower-earning year. |
| Spousal/Survivor Benefits | Permanently reduced for both you and your spouse. | Spousal and survivor benefits are based on your unreduced benefit amount. | Maximizes the survivor benefit for your spouse if you pass away first. |
| Flexibility | Offers immediate access to income, which can be critical for some budgets. | Strikes a balance between immediate access and maximizing future payments. | Requires a larger bridge of savings to delay benefits, but offers the maximum monthly payment. |
Conclusion
Turning 62 is a time for strategic reflection, not an automatic call to action. While you have the option to claim your Social Security benefits, doing so locks in a permanently reduced monthly payment. Your decisions around when to start Social Security and how to manage the healthcare gap before Medicare at 65 will significantly impact your long-term financial security. By thoroughly reviewing your financial situation, considering your health and life expectancy, and understanding the trade-offs of early vs. delayed claiming, you can make an informed choice that aligns with your retirement goals. You can also visit the Social Security Administration's website to create an account and use their online calculators for personalized estimates of how different ages and scenarios will affect your benefits.
