Why taking Social Security at 62 might make sense for you. Even if the ‘basic math’ says 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.

Moreover, the destiny of the programme is besides successful question. Insufficient backing could spot the programme exhausting its spot funds by 2032, which volition effect successful a 23% simplification successful benefits for retirees and those with a disablement (3). With this successful mind, galore Americans who are nearing status are making immoderate analyzable calculations astir however overmuch they whitethorn person and however agelong they expect to live.

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 (4). Many radical unrecorded into their 80s and 90s, portion others don’t scope mean beingness expectancy.