Social Security benefits can be applied for once you reach the age of 62, since this government money can provide an important source of financial support, it might seem like a good idea to start receiving payments immediately. In fact, there are many disadvantages to starting receiving benefits as soon as the possibilities of applying for them are enabled.
The most important disadvantages when applying for Social Security at the age of 62 is something that will convince you not to want it, to do, there are three important reasons why such an early statement does not make sense for many others, below is why
62 and Ready to Retire? Here’s Why You Should Wait
The biggest reason you would never want to apply for Social Security at age 62 is because doing so would reduce your retirement checks, which you will receive month by month for the rest of your life.
The full retirement age (FRA) is based on the year of birth, it is 67 years for anyone who was born in 1960 or later, to get your standard benefit in full, you can not start receiving payments before the FRA, anyone who makes the application in advance will minimize their checks by 5/9 of 1% for the first 36 months and by 5/12 of 1% for each previous month.
Applying at age 62 with a FRA of 67 would result in a 30% reduction in monthly Social Security income. I don’t want to accept much less money, especially since these retirement checks are going to be the only source of fixed income for life that is protected against inflation. Of course, you should have savings, but they do not have these built-in protections.
If You Plan to Stay Working, You Must Possibly Want to Wait
There is another reason why it is not feasible to start applying for the checks at the age of 62. If you do not want to stop working because you like your job and are quite flexible, and plan to continue working well into your 60s and ideally until 70, it is true that you can work while receiving Social Security benefits.
However, if you work and receive benefits at the same time and have not yet reached full retirement age, then the benefits are minimized if your income exceeds a certain threshold.
That limit is quite low. In the year 2024, you will lose $1 of your benefit payment for every $2 you earn above $22,320 if you do not reach full retirement age at any time throughout the year. Eventually, this is credited back, but that happens over time, after you reach full retirement age.
Finally, there’s one more reason why you shouldn’t apply for Social Security at age 62 if you want to have the best possible chance of maximizing your Social Security benefits throughout your life after all the money you’ve paid over the years. Studies have shown that a large part of retirees will end up in a better situation if they wait to reach the age of 70 to start receiving the checks.
If you also want to increase your lifetime income from Social Security, waiting as long as you can, will usually be your best alternative. So, you may want to consider giving up an application at age 62 and make plans to try to delay as much as possible before your checks start coming in.
