Turning 62 is a significant milestone for many, as it marks the earliest age a person can start collecting Social Security retirement benefits. However, deciding to claim benefits at this age requires careful consideration, as it results in a permanent reduction of your monthly payment. For individuals born in 1960 or later, claiming at 62 means receiving only 70% of the benefit they would be entitled to at their full retirement age (FRA) of 67. This article explores what you get from the government when you turn 62, the financial implications, and the factors to weigh before making your decision.
The Financial Implications of Claiming at 62
Permanent Reduction in Benefits
The most important aspect of claiming Social Security at age 62 is the permanent reduction in your monthly check. For every month you receive benefits before your full retirement age, your benefit is reduced. The reduction rate varies slightly depending on how early you file, but for those with an FRA of 67, claiming at 62 results in a roughly 30% reduction. This lower amount is the new base for all future cost-of-living adjustments (COLAs), meaning every increase will be smaller than it would have been at a higher base.
Impact on Spousal and Survivor Benefits
If you are married, your decision to claim early can also affect your spouse. A lower-earning spouse can claim a benefit based on the higher-earning spouse's work record. If the higher-earner claims at 62, this also reduces the potential spousal and survivor benefits available to their partner. By contrast, a higher-earning spouse who delays claiming their benefits increases the potential survivor benefit for their partner. This is a critical point for financial planning, especially for couples with a significant earnings gap.
Earnings Limits and Benefit Withholding
If you claim benefits at 62 but continue to work, your benefits may be temporarily withheld if your earnings exceed a certain limit. For 2025, the annual limit is $23,400. For every $2 you earn over this limit, $1 of your Social Security benefit will be withheld. The good news is that these withheld benefits are not lost forever. At your full retirement age, the Social Security Administration (SSA) will recalculate your monthly benefit to account for the months benefits were withheld, resulting in a higher payment. However, this is still a complicating factor for those who plan to work part-time in their early 60s.
Comparison: Claiming at Age 62 vs. Full Retirement Age
To illustrate the financial trade-offs, consider a hypothetical individual with an FRA of 67 whose benefit at that age would be $2,000 per month. Here is a comparison of their monthly and lifetime benefits (assuming a lifespan to age 85):
| Feature | Claiming at Age 62 | Claiming at Full Retirement Age (67) |
|---|---|---|
| Monthly Benefit (before COLA) | $1,400 (70% of full benefit) | $2,000 (100% of full benefit) |
| Total Months of Payments (up to age 85) | 276 months (23 years) | 216 months (18 years) |
| Cumulative Lifetime Payments | $386,400 | $432,000 |
| Impact on Survivor Benefit | Lower survivor benefit for spouse | Higher survivor benefit for spouse |
| Earnings Limit While Working | Subject to annual earnings limit | No earnings limit applies |
| Health Insurance | NOT Medicare eligible; must secure private coverage until age 65 | NOT Medicare eligible; must secure private coverage until age 65 |
*Note: Calculations are simplified and do not account for cost-of-living adjustments (COLAs), tax implications, or other variables.
Important Considerations Beyond Social Security
Medicare and Health Insurance
It is critical to remember that Medicare eligibility does not begin until age 65 for most people. If you retire at 62, you will need to secure health insurance for the gap between 62 and 65. Options include COBRA, private insurance, or coverage through the Affordable Care Act marketplace. The cost of this health insurance can be substantial and may significantly deplete your early Social Security benefits, a factor many people overlook.
Coordinating with Other Income
Your Social Security benefits are just one piece of your retirement income puzzle. When deciding on a claiming age, it's essential to consider other sources of income, such as pensions, 401(k)s, or IRAs. A larger Social Security check from delaying could allow your investment portfolios to grow longer and be a reliable, inflation-adjusted income stream later in life. Financial advisors often recommend coordinating your claiming strategy with your overall retirement income plan to maximize total lifetime income.
The Future of Social Security
Worries about the long-term solvency of the Social Security program are common, but it is not expected to disappear. While there may be future policy changes to address funding gaps, the program is a long-standing fixture. Basing your claiming decision on fears that the program will vanish is not a sound strategy. Instead, focus on how the program works now to best fit your personal financial and life circumstances.
Conclusion: Making an Informed Choice
What do you get from the government when you turn 62? The answer is early, but permanently reduced, Social Security benefits. This decision is not one-size-fits-all and depends heavily on your unique situation, including your health, financial needs, and life expectancy. While claiming early provides immediate cash flow, it comes at a cost of lower lifetime payments. Waiting, especially until age 70, can substantially increase your monthly benefit for the rest of your life.
Ultimately, the best approach is to carefully weigh the pros and cons, assess your overall financial picture, and possibly seek advice from a financial professional. Use the tools provided by the Social Security Administration to get personalized estimates, but remember that the data points to a clear financial reward for delaying if you can afford it. For many, delaying is an effective form of insurance against outliving their savings.
