It takes a really big bite out of your checks.
Signing up for Social Security at 62 guarantees you the most checks possible in your lifetime, but it also reduces the size of your monthly benefit. It’s not a bad move for everyone, though it’s important to weigh all your options before deciding on a claiming age.
Below we’ll look at just how much claiming Social Security at 62 might cost you each month so you can make an informed decision.
Why does claiming Social Security at 62 shrink your checks?
You may decide when you’d like to leave the workforce, but the Social Security Administration decides your full retirement age (FRA). This is the age you qualify for your full Social Security benefit based on your earnings history.
For most people today, FRA falls between 66 and 67. The following table can help you identify yours based on your birth year:
| BIRTH YEAR | FULL RETIREMENT AGE (FRA) |
|---|---|
| 1943 to 1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
SOURCE: SOCIAL SECURITY ADMINISTRATION.
But many don’t want to wait until their FRA to claim. You can apply earlier, but the government shrinks your checks as a result. Specifically, you lose:
- 5/9 of 1% per month for each month you claim early, up to 36 months
- 5/12 of 1% per month for each additional month of you claim early beyond 36 months
I’ll spare you the math and tell you claiming at 62 results in a 25% reduction for those with a FRA of 66. It’s a 30% reduction for those with a FRA of 67. This reduction is typically permanent. Besides an annual cost-of-living-adjustment, the Social Security Administration won’t increase your checks unless you had benefits withheld due to the earnings test.
How much does claiming at 62 hurt the average senior’s benefit?
The average primary insurance amount (PIA) — the benefit one is eligible for at FRA — was $1,877.14 as of Dec. 2022. This doesn’t include the 8.7% cost-of-living adjustment (COLA) for 2023 or the 3.2% COLA for 2024. If we add these in, we can estimate that individuals getting the average $1,877.14 PIA in Dec. 2022 are now getting about $2,105.75 per month.
But remember, claiming at 62 means a benefit reduction of 25% to 30%. So the average senior loses $526.44 to $631.73 in benefits per month.
That’s a substantial number on its own, but it really becomes eye-opening when you consider how that reduction adds up over time. Let’s assume you live until your 85th birthday. If you’d claimed a $2,105.75 monthly benefit from your FRA of 67 until turning 85, you’d collect lifetime benefits of about $454,842, not accounting for annual COLAs. But if you’d claimed a $1,474.02 benefit beginning at 62, you’d only get about $406,830 overall. That’s more than $48,000 less over your lifetime.
It doesn’t play out that way for everyone, though. If you have health issues that may reduce your life expectancy, you’re better off claiming early. And there are those who simply cannot afford to delay benefits until their FRA. Claiming more in potential lifetime Social Security benefits isn’t worth endangering your financial security today.
When should you start claiming Social Security?
When you begin to collect Social Security is a personal decision, but it’s best to explore a variety of options before making the call. The easiest way to do this is using the benefit calculator tool in your my Social Security account.
After creating your account, you can view a personalized estimate of your future Social Security benefit based on your work history to date. This assumes you’ll earn roughly the same amount throughout the rest of your career, though you can change the income estimates if you’d like. Then, you can choose any starting age between 62 and 70 — the age when you qualify for your maximum Social Security benefit — to see what your monthly checks would look like.
Choose a few ages you’re considering and multiply the monthly benefit by 12 to get your estimated annual benefit. Multiply that by the number of years you expect to collect Social Security. Health and finances permitting, you should wait until the claiming age that will give you the largest lifetime benefit to sign up.
