Early Social Security Retirement Benefits
At 62, the most significant and well-known benefit you qualify for is early Social Security retirement benefits. While this provides a steady income, it's crucial to understand that claiming early means accepting a permanently reduced monthly payment. Your full retirement age (FRA), which is 67 for those born in 1960 or later, is when you can receive 100% of your earned benefits. Claiming at 62 could result in a monthly payment that is 25–30% lower for the rest of your life.
How Early Claiming Affects Your Payment
For each month you claim before your FRA, your benefits are reduced. For example, if your FRA is 67 and you turn 62 in 2025, your benefit would be reduced by about 30%. This reduction is permanent and affects not only your payment but potentially the benefits your spouse or dependents could receive based on your record. The decision to claim early is a personal one, weighing the immediate need for income against a larger, long-term monthly payment. Some factors to consider include your overall health, other sources of income, and whether you plan to continue working.
The 'Earnings Test' and Working While Claiming
If you choose to work while receiving early Social Security benefits, be aware of the Social Security 'Earnings Test.' For those under FRA, your benefits may be temporarily reduced if your earnings exceed a certain limit. In the year you reach FRA, this limit is much higher, and after you reach FRA, the earnings test no longer applies. Any benefits withheld due to the earnings test are not lost forever; your monthly benefit will be recalculated at your FRA to give you a higher payment based on the months that were withheld.
Exploring Healthcare and Insurance Options
While Medicare eligibility doesn't begin until age 65, turning 62 requires a careful look at your healthcare and insurance strategy for the intervening years. Your options typically depend on your employment status.
- Employer-Sponsored Coverage: If you are still working, continuing your employer's health insurance is a common option. However, if you're retiring early, this coverage may end.
- COBRA: This federal law allows you to continue your health coverage from a previous employer for a limited time (usually 18 months). It can be an expensive but reliable bridge to Medicare.
- Affordable Care Act (ACA) Marketplace: The ACA Marketplace offers a range of health insurance plans. Your eligibility for subsidies may help make coverage more affordable, depending on your household income.
- Spousal Coverage: If your spouse has employer-sponsored health insurance, you may be able to be added to their plan.
Unlocking a World of Senior Discounts
One of the more enjoyable perks of turning 62 is the eligibility for various senior discounts. While many companies offer discounts beginning at 50 or 55, 62 is a common benchmark for deeper savings, particularly in industries like travel.
Common Senior Discount Categories
- Travel: Airlines, hotels, and car rental agencies often have special rates for travelers aged 62 and older. Major hotel chains frequently offer reduced room rates for seniors.
- Dining: Many restaurants provide a percentage off or special early bird menus for seniors. It's always worth asking if a discount is available.
- Retail and Groceries: Some stores and supermarkets offer special senior shopping days with a percentage discount on your purchase.
- Recreation and Entertainment: Many movie theaters, museums, and national parks offer reduced admission or passes for seniors.
Using Senior Discounts Effectively
To make the most of these benefits, always carry a valid ID. It's also smart to simply ask about a senior discount. While some companies advertise their policies, many do not, and you might be surprised by the savings available just by asking.
Weighing Your Financial Decisions: A Comparison
Making the right choice for your retirement involves comparing the pros and cons of claiming Social Security at different ages. This table provides a simplified comparison for someone whose full retirement age is 67.
| Feature | Claiming at 62 | Claiming at 67 (Full Retirement Age) | Claiming at 70 (Delayed) |
|---|---|---|---|
| Monthly Benefit | Permanently reduced (approx. 70% of FRA amount) | 100% of your primary insurance amount | Increased (approx. 124% of FRA amount) |
| Cumulative Benefits | More years of benefits, which could total more if you don't live to an advanced age | Reaches a 'break-even' point with early claimants later in life | Higher monthly amount means quicker payoff, especially with longer life expectancy |
| Ability to Work | Subject to the Social Security 'Earnings Test' | No earnings test; you can earn as much as you want without affecting benefits | No earnings test; additional work can increase future benefit |
| Spousal/Dependent Benefits | Reduced spousal benefit, and dependents only qualify if you claim | Maximum spousal benefit is available | Highest possible spousal benefit is available |
Conclusion: Making the Right Call for You
Turning 62 offers a significant milestone with several options and considerations, most notably concerning your Social Security benefits. The decision to claim early is not a simple one and should be made after careful consideration of your financial needs, health, and life expectancy. Beyond federal benefits, the age of 62 unlocks a variety of discounts that can help stretch your budget in retirement. By thoroughly understanding what do you qualify for at age 62, you can make informed choices that pave the way for a financially secure and fulfilling retirement. It is highly recommended to speak with a qualified financial advisor to evaluate your specific situation and retirement goals before making any final decisions.
For more information on Social Security retirement benefits and to access retirement calculators, you can visit the Official Website of the Social Security Administration.
