The decision to claim Social Security early at age 62 comes with a unique set of considerations. While it may seem like the most appealing option, there are three compelling reasons why early claimants might find themselves taking home less than they anticipated.
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1. Early Claiming Reduces Your Benefit
Claiming Social Security at 62 is considered early. The government fixes a full retirement age (FRA) based on the individual’s birth year. Early claimants are subject to a reduction in their benefits, a calculation based on their FRA. For instance, if the average monthly benefit at an individual’s FRA is $1,909, claiming at 62 would mean receiving only $1,336 to $1,432 per month.
It’s worth noting that early claiming might be suitable for individuals with insufficient resources to cover essential expenses or those with a shorter life expectancy. However, for others, delaying benefits, even past the FRA, could increase their monthly checks to 124% or 132% of the full benefit.
2. Earnings Test Could Affect Your Earnings
The Social Security earnings test withholds money from individuals earning over a specific amount while claiming Social Security under their FRA. Those exceeding the limit might lose a portion of their benefits, which, although refundable upon reaching FRA, will still result in a smaller overall benefit than if the claim had been delayed initially.
3. Medicare Premiums Withheld for Seniors
Most seniors claiming Social Security and Medicare have their Part B premiums deducted from their checks. Although not technically a loss, this deduction reduces the amount received and should be considered to avoid unexpected discrepancies.
Other Considerations
In addition to the highlighted reasons, issues such as outstanding debts to the IRS or unpaid child support can further impact the amount received from Social Security. It is advisable to reach out to the Social Security Administration for any clarifications and to avoid potential clerical errors.
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