Should You Start Collecting Social Security at 62 — or Wait?

Here's one of those "it depends" questions -- as many are when it comes to personal finances. The question is "which is better -- taking Social Security benefits at 62 or waiting until later in life?" At issue is the fact that if they're taken at 62, they're lower than they would be later on.

There are lots of factors to consider, here are the main thoughts from MSNBC:

In the end, since you don’t know how long you’ll live, your decision will likely have less to do with maximizing your total payout and more with your personal retirement plan. Collecting early means locking in a lower payment for the rest of your life – and for your spouse if they survive you.

So some people may prefer the security of collecting a bigger check. On the other hand, if you need the money at 62, you may be better off collecting early and letting your tax-deferred savings and investment continue to accumulate returns.

Personally, I think it will be a miracle if Social Security is around in any form close to today when I get to be 62. It's more likely that my choice will be whether or not to take it "early" at 72 -- not 62. That's why I set my retirement number assuming I'd get nothing from Social Security.

For more thoughts on this topic, see The Best Age to Start Social Security, Don't Take Early Social Security Retirement If You Don't Have To and The Five Costliest Mistakes Retirees Make about Social Security.

And if you'd like more information on retirement in general, visit Best of Free Money Finance: Retirement Posts.

Comments

[Dus10]

I outlined the calculation of how much you can earn from receiving early distributions on Rational Cents, in article titled "Reaching Retirement: Pulling Partial Benefits or Waiting for Full Benefits" (http://rationalcents.blogspot.com/2006/08/reaching-retirement-pulling-partial.html).

[Lord]

Your personal life expectancy is the most important consideration. Since the average 65 year old can expect to live to 85, if you don't expect to reach that you should retire sooner. If you do expect to reach that, and you don't need the money earlier, then it pays to wait until normal retirement. If you do need it, you don't have much choice.

I am dubious of the statement on drawing it early to maximize tax free earnings because increased Social Security is also tax free. It is worth delaying it to standard retirement age if possible. I wouldn't delay it any longer unless working though as the gain is miniscule from that point forward.

[Lord]

The worst case SS scenario for you would be collecting 2/3s at 70. Even with no tax and no age increases, it will still be able to pay out 2/3s forever. Medicare is a different story though and you will need everything you can get for healthcare.