Your benefits will be higher if you wait. But for many Americans, retiring at 62 is simply too appealing.
Thinking about collecting your Social Security retirement benefits at age 62? You’re not alone. Nearly one in four people opt to receive their benefits at the earliest age possible, according to the Social Security Administration (SSA).
There are several pluses associated with retiring early. You can have more time to spend on hobbies, traveling, and visiting with friends and family. Any stress you had in your job will go away. But how much can you expect to receive in Social Security benefits at age 62?
Early retirement benefits
The exact amount you’ll receive in retirement benefits at age 62 depends primarily on how long you worked and how much money you made. The SSA uses your 35 highest-earning years to calculate benefits.
You can go to the SSA website to calculate your benefits. The agency has a quick calculator available that can give you a rough estimate. You can also use a more detailed online calculator that provides a more accurate estimate, but you’ll need your earnings history for each year.
On average, retired workers who collect benefits at age 62 receive $1,275 (all amounts rounded to the nearest dollar) per month. Men receive an average of $1,421 per month, while women receive an average of $1,141 per month.
Those numbers are based on the latest data from the SSA as of December 2022. The averages now will almost certainly be higher due to the Social Security cost-of-living adjustment (COLA) of 8.7% that went into effect in January 2023. And they’ll increase next year as well with the 2024 COLA of 3.2%.
What you’ll forego
While you can enjoy some potential lifestyle advantages by retiring early, there’s a trade-off involved. You’ll forego significantly higher monthly retirement benefits that you could receive by waiting to collect Social Security.
The SSA will reduce your retirement benefit by five-ninths of 1% for each month that you begin receiving benefits before your full retirement age (FRA) for up to 36 months. Before then, your monthly benefits will be reduced by another five-twelfths of 1%. Collecting retirement benefits at age 62 will reduce how much you make by 30%.
You could make even more, though, by waiting until age 70 to collect Social Security retirement benefits. The SSA will increase your monthly benefit by 8% per year (for up to three years) if you hold off on receiving benefits.
Can you collect Social Security benefits at age 62 but continue to work to supplement your income? Sure. Keep in mind, though, that the SSA will deduct $1 from your benefit for every $2 you earn above an earnings limit ($22,320 in 2024). During the year you reach your FRA, the SSA will deduct $1 from your benefit for every $3 you earn above a higher earnings limit ($59,520 in 2024). However, you’ll recover these benefits once you reach your FRA.
Two “hidden” costs of collecting Social Security at 62
There are two other “hidden” costs of collecting Social Security retirement benefits at age 62 that many people might not think about.
If you recall, the SSA uses your 35 highest-earning years. Many people would make more if they continued working after 62 than they did earlier in their careers. As a result, collecting benefits at age 62 could reduce the amount you receive beyond the effect of the SSA’s early retirement penalty.
The other potential cost is health insurance. Many Americans who retire at age 62 will be forced to pay fully for their insurance. If you wait until 65, though, you will be eligible for Medicare.
