Here’s why you ought to seriously consider taking Social Security at 62. Even if the 'basic' math suggests otherwise

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If you’ve spent immoderate clip readying for retirement, you astir apt cognize the basics of Social Security. Most radical tin commencement claiming benefits astatine property 62, reaching afloat status property (FRA) betwixt 66 and 67 depending connected their commencement year, and tin hold benefits until 70 (1).

The longer you wait, the larger your monthly outgo — delaying past your FRA tin summation your payment by up to 8% per year, according to the Social Security Administration (SSA) (2).

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That sounds similar a large woody connected paper. But successful practice, the determination is much analyzable and, for immoderate retirees, delaying could extremity up costing money.

Here’s wherefore the elemental mathematics down delaying benefits doesn’t ever adhd up.

The occupation with the “basic math” down delaying Social Security is that it often overlooks longevity risk. While it’s existent that waiting longer increases your benefit, your full beingness payout could beryllium little if you don’t unrecorded arsenic agelong arsenic expected.

For example, if you hold until property 70 to commencement collecting benefits but walk distant astatine 72, you’ve lone received 2 years of payments. Claiming earlier — adjacent astatine a reduced complaint — could person resulted successful a larger full payout implicit your lifetime.

If you walk distant earlier 70, you efficaciously person thing from a strategy you’ve spent decades paying into.

To beryllium fair, estimating longevity is inherently uncertain. According to the Peterson-KFF Health System Tracker, mean beingness expectancy successful the U.S. is astir 78.4 years — but idiosyncratic outcomes alteration wide (3). Many radical unrecorded into their 80s and 90s, portion others don’t scope mean beingness expectancy.

To assistance navigate this uncertainty, galore fiscal advisors usage a “breakeven age” analysis. This calculation estimates the property astatine which the cumulative benefits from delaying Social Security surpass those of claiming earlier.

For example, idiosyncratic entitled to $2,000 a period astatine their afloat status property of 67 would request to unrecorded longer than 78 years and 8 months to travel retired up compared to claiming astatine 62. If they hold until property 70, the breakeven property rises to astir 80 years and 5 months (4).