Is It Better to Take Social Security at 62, 67, or 70?

When claiming Social Security benefits, one decision can make a difference of hundreds of thousands of dollars over your lifetime: the age you start collecting. While 62 is the most popular age to claim benefits, with 30% of retirees opting in as soon as they’re eligible, waiting until 67 or even 70 can pay off big in the long run.

The Social Security crossover point is the age when total benefits from delaying payments exceed those taken earlier. Understanding this concept can optimize retirement income and enhance financial stability. It marks the age at which the total benefits received from delaying Social Security surpass those taken at an earlier age, making it a critical consideration for retirees.

Delaying benefits past your full retirement age (66-67 for most people) results in an 8% increase for each year you wait up to age 70. This could mean that claiming at 70 instead of 62 results in a 77% jump in your monthly income—for life.

So, how do you decide if you’ll take social security at 62 vs. 67 vs. 70 or somewhere in between? Is that right for you? 

How Your Social Security Benefit Is Calculated

Before diving into the specifics of claiming at different ages, it’s important to understand how your Social Security benefit is determined. Your monthly payment is based on four key factors:

• Your work history: How long have you worked in jobs where you paid Social Security taxes?
• Your earnings: How much you’ve earned over your career.
• Your full retirement age (FRA): The age at which you’re entitled to 100% of your earned benefits (66-67 for most people).
• Your claiming age: The age when you start collecting benefits (can be as early as 62 or as late as 70).

The Social Security Administration calculates your basic benefit, known as your primary insurance amount (PIA), using a formula considering your 35 highest-earning years. This is the amount you’ll receive if you claim at your full retirement age.

How Claiming Age Impacts Your Benefit

Here’s where your claiming age comes into play: If you start collecting Social Security before your FRA, your benefit will be permanently reduced. Claim at the earliest possible age of 62, and you’re looking at a 25-30% cut, depending on your birth year.

On the other hand, if you delay claiming Social Security beyond your FRA, your benefits will continue to increase each year until you reach age 70. This delayed retirement credit can significantly boost your monthly payments, making it crucial to maximizing your overall Social Security benefits.

Of course, you’ll receive benefits for a longer period of time if you claim early. We’ll discuss how to figure out your break-even point later on.

The Pros and Cons of Claiming Social Security at 62

For many retirees, 62 is a magic number—the earliest age you can start collecting Social Security retirement benefits. Let’s break down the pros and cons.

How Much Does Claiming at 62 Reduce Your Benefit?

So, how much will I make with early retirement? Claiming Social Security at 62 means locking in a permanently reduced benefit for the rest of your life. The reduction amount depends on your full retirement age:

• If your FRA is 66: claiming at 62 means a 25% reduction.
• If your FRA is 67: claiming at 62 means a 30% reduction.

In dollar terms, let’s say your full benefit at 67 would be $1,500 per month. If you claim at 62, you’ll only receive $1,050 monthly—a $450 difference.

The Case for Claiming Early

So why do so many people claim Social Security at 62? There are a few potential advantages:

• You start receiving benefits earlier, which can be helpful if you need the income or want to enjoy retirement sooner.
• If you have health issues or a shorter life expectancy, claiming early may make sense to maximize your total lifetime benefits.
• Claiming early can allow you to delay tapping other retirement accounts, giving them more time to grow.

The Drawbacks of Locking in a Lower Benefit

On the flip side, there are some significant downsides to claiming Social Security at 62:

• Your benefit is permanently reduced, which can add up over a long retirement. If you live to 85 or beyond, you could miss out on thousands of dollars annually.
• It can be difficult to make up that lost income later on, especially if you deplete your other retirement savings too quickly.
• If you keep working after claiming early, your benefit may be temporarily reduced if you earn over a certain amount ($21,240 in 2023). 

Whether claiming at 62 makes sense for you depends on your unique financial situation, health status, and retirement goals. Before making this decision, it’s important to weigh the short-term benefits against the long-term costs.

What Happens If You Claim Social Security at Your Full Retirement Age?

Your full retirement age (FRA) is when you’re entitled to 100% of the Social Security benefit you’ve earned over your career. For most older adults, that age is 66 or 67, depending on your birth year.

Claiming at your full retirement age is often considered the default or “on-time” option. You’ll receive your full primary insurance amount (PIA) each month, with no reduction for claiming early or bonus for delaying.

The Advantage of Claiming at Full Retirement Age

The main benefit of waiting until your FRA claims Social Security is that you lock in your full-earned benefit for life. There’s no permanent reduction like there would be if you claimed at 62.

Let’s look at an example. Say your FRA is 67, and your full benefit is $1,500 per month. Here’s how your benefit would compare if you claimed at 62, 67, or 70:

• Claim at 62: $1,050/month (30% reduction)
• Claim at 67 (FRA): $1,500/month 
• Claim at 70: $1,860/month (24% increase)

As you can see, claiming at your FRA means a significantly higher benefit than starting early at 62. You also have the freedom to keep working without worrying about the earnings limit that applies before FRA, which can temporarily reduce your benefit.

The Case for Delaying Past Full Retirement Age

While claiming that FRA is a solid choice, there’s also an argument for delaying even longer if you can afford to. Remember, every year you wait past FRA (up to 70), your benefit grows by 8 percent.  

Of course, delaying benefits isn’t the right choice for everyone. You’ll need to weigh factors like:

• Your health and expected longevity.
• Your other sources of retirement income.
• Your plans for the early years of retirement.

But if you’re in good health, have reason to expect a long life, and can afford to delay, claiming at 70 instead of your FRA can net you a substantially larger lifetime benefit.

Why Claiming at 70 Can Pay Off

For retirees who can afford to wait, delaying Social Security until age 70 can be a smart way to maximize your lifetime benefit. That’s because your benefit increases by 8% for each year you delay past your full retirement age, up to age 70. 

The Advantages of Delaying to 70

Beyond just increasing your benefit, claiming at 70 can also provide a few other advantages:

• It maximizes surviving spouse benefits. If you pass away first, your spouse will be entitled to 100% of your benefit, including any delayed retirement credits.
• It can help protect against longevity risk. Having that higher monthly income can be crucial if you live well into your 80s or 90s.
• It may reduce your tax burden since you’ll have fewer years of benefits subject to taxation.

The Potential Drawbacks of Waiting

Of course, delaying benefits until 70 isn’t the right choice for everyone. Here are a few potential downsides to consider:

• You’ll miss out on benefits during your 60s, which for many are the “go-go” years of retirement when you may want to travel or pursue other activities.  
• If you have health issues or don’t expect to live into your 80s, you may not live long enough to break even on the delayed benefits.
• You’ll need other sources of income to bridge the gap until your Social Security kicks in.

Ultimately, the decision of whether to wait until 70 is a personal one that depends on your health, financial situation, and retirement goals. But for those who can swing it, delaying can substantially boost your lifetime Social Security income.

How to Determine Your Optimal Claiming Age

With many factors to consider, pinpointing the best age to start Social Security can feel overwhelming. But by working through a few key considerations, you can arrive at the claiming strategy that makes the most sense for you.

Consider Your Life Expectancy 

One of the most important pieces of the Social Security puzzle is how long you expect to live. The longer your life expectancy, the more it pays to delay benefits.

You can use a Social Security break-even point calculator to determine how long you’d need to live for delaying benefits to pay off. For example, if your FRA is 67 and $1,500 is your monthly benefit, your break-even age for delaying to 70 would be around 82.5.

Of course, no one knows exactly how long they’ll live. But considering your health, family history, and lifestyle can help you make an educated guess.

Evaluate Your Financial Situation

Your overall financial picture is another key factor in deciding when to claim Social Security. Consider:

• Your current and expected income from other sources (pensions, investments, rental properties, etc.).
• Your retirement savings and how long they’ll last.
• Your planned retirement lifestyle and expenses.
• Whether you plan to keep working in some capacity.

You can delay benefits comfortably if you have ample savings and other income streams. But if you need Social Security to make ends meet, claiming earlier may be necessary.

Understand the Tax Implications

Many retirees are surprised to learn that Social Security benefits can be taxable. Depending on your total income, up to 85% of your benefit may be subject to federal income taxes.  

Claiming later can actually help reduce your tax burden since you’ll have fewer years of benefits subject to taxation. And if delaying benefits allows you to postpone drawing down other retirement accounts, that can also minimize your tax liability.

Factor in Spousal and Survivor Benefits

If you’re married, it’s important to coordinate your claiming strategy with your spouse to maximize your total lifetime benefits as a couple. Some key considerations:

• The lower-earning spouse may want to claim early, while the higher-earner delays to maximize the survivor benefit. 
• Spousal benefits (up to 50% of the primary earner’s benefit) can be claimed as early as 62, but they don’t increase by delaying past FRA.
• Divorced spouses may also be eligible for benefits on an ex’s record if the marriage lasted 10+ years.

A financial advisor or Social Security expert can help you crunch the numbers and determine the best-claiming ages for you and your spouse.

Your Next Steps: Making an Informed Claiming Decision

Armed with an understanding of how claiming age affects your benefit, the pros and cons of different strategies, and the key factors to consider, you’re well on your way to making a smart Social Security decision. Here are your next action steps:

• Use the official Social Security benefits calculator to estimate your benefits at different claiming ages and see how additional earnings could increase your payment.
• Discuss your options with a trusted financial advisor who can help you weigh Social Security in the context of your overall retirement plan.
• If you’re married, sit down with your spouse to explore how your claiming ages will impact your total benefits as a couple and any survivor benefits.  
• Consider your health, expected longevity, retirement lifestyle, and income needs to determine the claiming age that best fits your unique circumstances.
• Decide on your claiming age and determine when and how to file for benefits.

Remember, there’s no one-size-fits-all answer to when to claim Social Security. By taking the time to understand the tradeoffs and crunch the numbers for your situation, you’ll be well-positioned to make the right choice.

Crafting Your Personal Social Security Strategy

Choosing when to claim Social Security is one of your most important retirement decisions. In fact, 75% of adults aged 50 and above worry that Social Security will deplete its funding in their lifetime. So, while there’s no perfect answer for everyone, understanding the implications of claiming social security at 62 vs. 67 vs 70 or any age in between is crucial to maximizing your benefits. 

Claiming early at 62 can make sense if you need the income immediately or think you will need to live longer to benefit from delaying. But for many retirees, waiting until full retirement age (or even 70 if you can swing it) provides a substantial financial boost that can pay off over a long retirement.

Like any piece of your retirement plan, your Social Security strategy should be tailored to your unique financial situation, health, family circumstances, and personal goals. By weighing the tradeoffs, crunching the numbers, and coordinating with your spouse, you can determine the claiming age that best prepares you for a secure, fulfilling retirement.

The most important thing? Don’t leave this critical decision to chance. By being proactive and strategic about when and how you claim your hard-earned Social Security benefits, you can confidently enjoy your retirement years, knowing you’ve made a smart choice for your financial future.