Deciding when to collect Social Security can significantly impact your financial future. Social Security offers flexibility in when you can begin taking benefits, with each choice carrying distinct financial implications. The earliest you can start collecting Social Security retirement benefits is age 62, but there’s a significant cost to claiming early. Your monthly benefit amount increases for each month you delay claiming, up until age 70. While the decision about when to collect Social Security is deeply personal, understanding the financial mechanics is important for making an informed choice.
Many Americans rely heavily on Social Security income in retirement, with approximately 37% of men and 42% of women depending on these benefits for at least half their income. With such importance, timing your benefits claim becomes one of retirement’s most consequential financial decisions.
- The Impact of Claiming Age on Benefit Amounts
- Break-Even Analysis: A Critical Tool for Timing Decisions
- Health and Longevity Considerations
- Spousal Benefits and Married Couples’ Strategies
- Working While Collecting Social Security
- Tax Implications of Social Security Benefits
- The $16,728 Social Security Bonus: Understanding Delayed Credits
- Is Retiring at 62 a Good Idea?
- Drawing Social Security at 62 While Still Working Full-Time
- Average Social Security Check at Age 62
- How Much Social Security Will I Get If I Make $60,000 a Year?
- Frequently Asked Questions
- The Smartest Age to Collect Social Security
- Conclusion: Making Your Social Security Decision
The Impact of Claiming Age on Benefit Amounts
Your Social Security benefit amount is determined by your lifetime earnings record and the age at which you begin collecting. The Social Security Administration (SSA) calculates your primary insurance amount (PIA) based on your 35 highest-earning years, adjusted for inflation.
However, when you decide to collect Social Security can dramatically alter your monthly payment. Here’s how your claiming age affects your benefit amount:
- Age 62 (Earliest Eligibility): If you collect Social Security at 62, you’ll receive approximately 70-75% of your full retirement benefit, depending on your birth year. This permanent reduction represents a significant long-term cost for the advantage of earlier payments.
- Full Retirement Age (66-67): Collecting at your full retirement age (FRA) means receiving 100% of your calculated benefit. For those born between 1943 and 1954, FRA is 66. For those born in 1960 or later, it’s 67, with a gradual increase for birth years in between.
- Age 70 (Maximum Benefit): For each year you delay claiming beyond your FRA up to age 70, your benefit increases by 8% through delayed retirement credits. This means someone with an FRA of 67 could increase their monthly payment by 24% by waiting until 70 to collect Social Security.
These differences compound over a retirement that might span decades. For example, if your full benefit at age 67 would be $2,000 monthly, collecting at 62 might reduce it to around $1,400, while waiting until 70 could increase it to approximately $2,480 per month.
Break-Even Analysis: A Critical Tool for Timing Decisions
When determining when to collect Social Security, a break-even analysis can be illuminating. This calculation identifies the age at which the total benefits received from a delayed claiming strategy surpass those from an earlier claim.
For example, if you’re deciding between collecting at 62 versus waiting until 67, you’ll calculate how many years of higher payments (starting at 67) it would take to equal the total amount you’d receive by starting at 62. Typically, the break-even point falls between ages 77 and 82, depending on your specific benefit amounts.
Consider this simplified example:
- Option A: Collect $1,500 monthly starting at age 62
- Option B: Collect $2,500 monthly starting at age 67
By age 62, Option A begins accumulating benefits ($1,500 × 12 = $18,000 annually). By the time you reach 67, Option A has already provided $90,000 in benefits. With Option B, you’d receive $30,000 annually starting at 67. The break-even age occurs when the total from Option B overtakes Option A, typically around age 79-80 in this scenario.
This analysis becomes particularly important when considering factors like longevity expectations, family health history, and current financial needs.
Health and Longevity Considerations
Your health status and life expectancy should significantly influence your decision about when to collect Social Security. If you have reason to believe you may not live well into your 80s due to health conditions or family history, claiming earlier might prove advantageous.
Conversely, if you’re in excellent health and longevity runs in your family, delaying benefits could potentially provide hundreds of thousands of dollars in additional lifetime income. Women, who statistically live longer than men, may particularly benefit from delayed claiming strategies.
The latest data shows that a 65-year-old man today can expect to live, on average, until age 84, while a 65-year-old woman can expect to live until 86.5. However, these are just averages—many Americans live well into their 90s, making longevity risk (the risk of outliving your money) a serious consideration.
Spousal Benefits and Married Couples’ Strategies
For married couples, coordinating when to collect Social Security becomes more complex but also offers additional strategic opportunities. Spouses can claim benefits based on their own work record or up to 50% of their partner’s benefit at full retirement age, whichever is higher.
This creates several potential claiming strategies:
- Both spouses delay: If both have strong earnings records and expect longevity, both might delay claiming to maximize their benefits.
- Lower-earning spouse claims early: The spouse with lower lifetime earnings might claim early while the higher earner delays, providing some income while maximizing the larger benefit.
- Spousal benefit optimization: In some cases, claiming spousal benefits might provide more lifetime income than claiming on one’s own record.
Additionally, survivor benefits add another layer to consider. When one spouse dies, the surviving spouse can switch to the deceased’s benefit amount if it’s higher. This makes maximizing the higher earner’s benefit particularly important, as it effectively becomes a form of life insurance for the surviving spouse.
Working While Collecting Social Security
Many Americans continue working while collecting Social Security, especially those who claim benefits early. However, if you haven’t reached your full retirement age and earn above certain thresholds, your benefits may be temporarily reduced.
In 2024, if you’re under full retirement age for the entire year, Social Security deducts $1 from your benefits for every $2 earned above $21,240. In the year you reach full retirement age, the deduction changes to $1 for every $3 earned above $56,520 (for the months before reaching FRA).
Importantly, these reductions aren’t permanently lost. Once you reach full retirement age, your benefit is recalculated to account for the months when benefits were withheld, effectively increasing your monthly amount going forward.
Additionally, continuing to work can potentially increase your benefit amount if your recent earnings replace lower-earning years in your benefit calculation. This can be particularly advantageous if you had years with no or low earnings in your work history.
Tax Implications of Social Security Benefits
When deciding when to collect Social Security, tax considerations shouldn’t be overlooked. Depending on your combined income (adjusted gross income + nontaxable interest + half of your Social Security benefits), up to 85% of your Social Security benefits may become taxable:
- For individual filers with combined income between $25,000 and $34,000, up to 50% of benefits may be taxable.
- For individual filers with combined income above $34,000, up to 85% of benefits may be taxable.
- For joint filers with combined income between $32,000 and $44,000, up to 50% of benefits may be taxable.
- For joint filers with combined income above $44,000, up to 85% of benefits may be taxable.
Claiming strategies that help manage your income to stay below these thresholds can significantly reduce your tax burden. For instance, drawing from Roth accounts (which don’t count as income for these calculations) while collecting Social Security can help minimize taxes on your benefits.
The $16,728 Social Security Bonus: Understanding Delayed Credits
You may have heard about a “$16,728 Social Security bonus”—this typically refers to the additional annual amount you might receive by delaying benefits from age 62 to age 70. Through delayed retirement credits, your benefit can increase by approximately 76-77% between these ages.
For someone who would receive $1,700 monthly at age 62, waiting until age 70 could increase their monthly benefit to around $3,094—a difference of $1,394 monthly or $16,728 annually. This “bonus” represents the significant incentive the Social Security system provides for delaying benefits.
While not technically a one-time bonus, this substantial increase in monthly payments can dramatically improve your retirement security, especially if you live well into your 80s or beyond.
Is Retiring at 62 a Good Idea?
While collecting Social Security at 62 and retiring at 62 are distinct decisions, they’re often interconnected. Retiring at 62 can be a good idea under certain circumstances:
- You have sufficient savings and investments to supplement reduced Social Security benefits
- You have health issues that might limit your ability to work or your life expectancy
- You strongly value additional leisure time and are willing to accept a more modest retirement lifestyle
- You have plans for this stage of life that you’re eager to pursue (travel, volunteering, family time)
However, retiring at 62 presents several challenges:
- Medicare eligibility begins at 65, leaving a potential three-year health insurance gap
- Reduced Social Security benefits if you claim early
- Longer retirement period requiring more substantial savings
- Less time to save and grow investments
- Possible premature depletion of retirement accounts
Research shows that working even a few additional years can dramatically improve retirement security. Each additional year of work allows you to save more, delay drawing from retirement accounts, potentially increase your Social Security benefit, and shorten the period your savings must last.
Drawing Social Security at 62 While Still Working Full-Time
Can you draw Social Security at age 62 and still work full-time? Yes, but with important caveats. As mentioned earlier, if you earn above certain thresholds before reaching your full retirement age, your benefits will be temporarily reduced.
For many higher earners working full-time, these earnings limits could result in most or all of their Social Security benefits being withheld. For example, someone earning $60,000 annually who claims at 62 would see substantial benefit reductions until reaching full retirement age.
Despite these reductions, there are scenarios where this strategy might make sense:
- Planning to retire mid-year: If you’ll stop working partway through the year but want benefits for the full year
- Expecting a significant drop in income: If your earnings will fall below the threshold soon
- Strategic claiming for married couples: As part of a broader household claiming strategy
Once you reach full retirement age, these earnings restrictions disappear entirely, and you can work and earn any amount without affecting your Social Security benefits.
Average Social Security Check at Age 62
The average Social Security check at age 62 was approximately $1,274 per month in 2023, reflecting the reduction for early claiming. This compares to an average benefit of about $1,825 for those who begin collecting at full retirement age.
This significant difference ($551 monthly, or $6,612 annually) illustrates the financial impact of early claiming. Over a 25-year retirement, this difference amounts to more than $165,000 in reduced benefits, not accounting for cost-of-living adjustments.
However, averages can be misleading. Your actual benefit amount depends on your specific earnings history, with higher lifetime earners receiving more. The maximum benefit for someone claiming at age 62 in 2023 was $2,572, while the maximum at age 70 was $4,555—a difference of nearly $2,000 monthly.
How Much Social Security Will I Get If I Make $60,000 a Year?
Social Security benefits are based on your 35 highest-earning years, not just your current or final salary. However, we can estimate approximate benefits based on consistent earning levels.
For someone who has consistently earned around $60,000 annually (adjusted for inflation) throughout their career:
- At age 62: Approximately $1,500-$1,600 monthly
- At full retirement age (67): Approximately $2,100-$2,200 monthly
- At age 70: Approximately $2,600-$2,700 monthly
These figures are approximations and will vary based on your specific earning history and the age at which you begin collecting Social Security. The Social Security Administration provides a quick calculator to estimate your benefits, as well as a personalized estimate through your online my Social Security account.
Interestingly, Social Security has a progressive benefit formula that replaces a higher percentage of pre-retirement income for lower earners than for higher earners. This means someone earning $30,000 annually might receive about 40% of their pre-retirement income from Social Security, while someone earning $120,000 might receive closer to 25%.
Frequently Asked Questions
How do I get the $16,728 Social Security bonus?
The “$16,728 bonus” typically refers to the additional annual amount you might receive by delaying benefits from age 62 to age 70. This isn’t a separate bonus payment but rather represents the substantial increase in your monthly benefit amount. For a typical earner who would receive $1,700 monthly at 62, waiting until 70 could increase their monthly payment to around $3,094—approximately $16,728 more annually.
Why do most people take Social Security at 62?
Despite the financial advantages of waiting, approximately 35% of men and 40% of women claim Social Security at 62. Common reasons include:
- Financial necessity due to job loss or health issues
- Concerns about Social Security’s long-term solvency
- Desire to retire early while in good health
- Lack of awareness about the significant benefit reduction
- Lower life expectancy expectations
At what age is Social Security no longer taxed?
This is a common misconception—Social Security benefits don’t become tax-free at any specific age. The taxation of benefits depends on your combined income, not your age. Up to 85% of your Social Security benefits may be subject to federal income tax, regardless of how old you are when collecting.
How much money will I lose if I retire at 62 instead of 67?
If you have a full retirement age of 67 and would receive $2,000 monthly at that age, claiming at 62 would reduce your benefit to about $1,400 monthly – a 30% reduction. This equals $7,200 less annually, potentially amounting to over $100,000 in reduced lifetime benefits for someone who lives to age 85. The exact amount depends on your specific benefit amount and longevity.
When my husband dies, do I get his Social Security and mine?
As a surviving spouse, you don’t receive both benefits in full. Instead, you can receive the higher of either your own benefit or your deceased spouse’s benefit (what they were receiving or would have received). This makes maximizing the higher earner’s benefit particularly important as a form of financial protection for the surviving spouse.
At what age do you get 100% of your Social Security benefits?
You receive 100% of your calculated Social Security benefit when you claim at your full retirement age (FRA). For those born between 1943 and 1954, FRA is 66. For those born in 1960 or later, it’s 67. For birth years between 1955 and 1959, FRA gradually increases from 66 years and 2 months to 66 years and 10 months.
Why is retiring at 62 a good idea?
Retiring at 62 might be advantageous if you have health concerns limiting your longevity, substantial savings to supplement reduced Social Security benefits, or strong personal reasons for wanting to retire early (family time, travel, pursuing other interests). However, it requires careful financial planning to account for reduced benefits, a longer retirement period, and the gap before Medicare eligibility at 65.
Is Social Security based on the last 5 years of work?
No, Social Security benefits are calculated based on your 35 highest-earning years throughout your career, adjusted for inflation. If you have fewer than 35 years of earnings, the calculation includes zeros for the missing years, which lowers your benefit amount. Working longer can potentially increase your benefit if your current earnings replace lower-earning years in your top 35.
How much Social Security will I get if I only made $20,000 a year?
Someone who consistently earned around $20,000 annually (adjusted for inflation) throughout their career might receive approximately:
- $800-$900 monthly if claiming at 62
- $1,150-$1,250 monthly if claiming at full retirement age (67)
- $1,400-$1,500 monthly if claiming at 70
These figures are approximations and would vary based on your specific earning history and claiming age.
The Smartest Age to Collect Social Security
While there’s no universal “smartest age” to collect Social Security that applies to everyone, research and financial analyses point to some general guidelines:
For single individuals:
- With serious health concerns or shorter life expectancy: Consider claiming earlier (62-65)
- With average health/longevity: Consider claiming at full retirement age (66-67)
- With excellent health and family longevity: Consider delaying until 70
For married couples:
- The lower earner might claim earlier, especially if not working
- The higher earner often benefits from delaying until 70, particularly if there’s a significant age or earnings disparity
A 2019 study by United Income found that optimal claiming strategies would have increased lifetime benefits by a median of about $73,000 for the households analyzed, with more than 90% of retirees benefiting from waiting beyond age 62 to claim.
Ultimately, the smartest claiming age depends on your individual circumstances, including health status, financial needs, marital status, and other retirement resources. For many Americans, however, waiting at least until full retirement age provides substantial financial advantages if feasible.
Conclusion: Making Your Social Security Decision
Deciding when to collect Social Security represents one of retirement’s most consequential financial decisions. While delaying benefits increases your monthly payment substantially, the “right” claiming age varies based on individual circumstances including health, financial needs, marital status, and retirement goals.
For those who can afford to wait, the guaranteed, inflation-adjusted income boost from delayed claiming provides valuable protection against longevity risk—the danger of outliving your savings. This becomes increasingly important as life expectancies continue to rise and traditional pensions become rare.
However, personal circumstances matter tremendously. Health concerns, caregiving responsibilities, job loss, or simply a strong preference for earlier retirement can all justify claiming before full retirement age for some individuals.
The most important approach is making an informed decision based on your specific situation rather than simply claiming at the earliest opportunity. Consider consulting with a financial advisor who specializes in retirement planning to analyze your options and develop a strategy that maximizes your retirement security.
Whatever you decide, take time to understand all your options. Your Social Security claiming strategy will influence your financial wellbeing for the rest of your life—making it well worth the effort to get it right.
