in our free newsletter.

Thousands benefit from our email every week.

  • Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Cons of claiming early

Surely after decades of working, you’re asking yourself, “Is 62 really early if the law permits it?” It is once you factor in the drop in long-term income. According to the Congressional Research Service, those who claim at 62 years old will see around a 30% reduction in monthly benefits compared to those who delay until full retirement age.

Depending on when you were born, full retirement age for 100% benefits lands at about 66 or 67. But if you hold out until age 70, your benefits come in even higher. In fact, you can receive an 8% boost for every year you wait.

Let’s say you were born in 1960. If you started your benefits in 2012 at age 62, your monthly income would be 30% lower compared to full retirement age. Instead of $1,000 per month you’d receive $700, the Social Security Administration explains.

But if that same person waits until full retirement age — 67 at present — they’ll get that whole $1,000; each year until 70 adds that extra 8%. Monthly, that’s $1,260 for an annual total of $15,120, compared to the $8,400 received at 62.

Read more: UBS says 61% of millionaire collectors allocate up to 30% of their overall portfolio to this exclusive asset class

Meet Your Retirement Goals Effortlessly

The road to retirement may seem long, but with WiserAdvisor, you can find a trusted partner to guide you every step of the way

WiserAdvisor matches you with vetted financial advisors that offer personalized advice to help you to make the right choices, invest wisely, and secure the retirement you've always dreamed of. Start planning early, and get your retirement mapped out today.

Get Started

Pros of claiming early

The above scenarios, of course, assume good health and a longer lifespan. But if you or your spouse experiences a disability or severe health problem, early benefits would definitely help defray costs.

Then there’s the question of debt. An extra 8% a year may pale in comparison to the interest racked up by unsecured, high-interest credit card debt where you delayed the payoff. Thus entering retirement debt free must be weighed against any decision to defer benefits.

The wisdom of collecting Social Security early also depends on the type of work you do. Retiring early from a backbreaking assembly line position, for example, is a much different matter than sticking it out in a laid-back desk job. It can also provide a gentle offramp as you exit gradually from everyday work; the lost percentages might not hurt you so much if you’re still a part-time wage earner.

Never too early to consult an expert

If you are still unsure of when to claim Social Security and what is best for your finances, working with a financial adviser is often a smart move — and it’s better to get started sooner rather than later.

According to data by the Federal Reserve Board, only 40% of non-retirees feel confident about their retirement savings — clearly many Americans could use help navigating their finances and making sure their assets are protected.

Since many people find it overwhelming to find a suitable and trusted professional, there are free online services that are designed to match you with a pre-screened financial advisor who will meet your unique needs for the retirement you've always dreamed of.

And at the end of the day, remember: You are working towards a smart retirement, too.

Sponsored

Meet Your Retirement Goals Effortlessly

The road to retirement may seem long, but with WiserAdvisor, you can find a trusted partner to guide you every step of the way

WiserAdvisor matches you with vetted financial advisors that offer personalized advice to help you to make the right choices, invest wisely, and secure the retirement you've always dreamed of. Start planning early, and get your retirement mapped out today.

About the Author

Amy Legate-Wolfe

Amy Legate-Wolfe

Freelance contributor

Amy Legate-Wolfe is an experienced personal finance writer and journalist. She has a Bachelor of Arts in History from the University of Toronto, a Freelance Writing Certificate in Journalism from the University of Toronto Schools, and a Master of Arts in Journalism from Western University. Amy has worked for Huffington Post, CTVNews.ca, CBC, Motley Fool Canada, and Financial Post. She is skilled at analyzing trends and creating content for digital and print platforms. In her free time, Amy enjoys reading and watching British dramas on BritBox. She is a mother and dog-mom to a Wheaten Terrier.

What to Read Next

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.