There are hidden dangers to claiming benefits early.
The age at which you start collecting Social Security benefits is a crucial decision because it affects your monthly retirement income for the rest of your life. But with so many options for when to claim, determining the best age can be difficult.
Age 62 is the earliest age you can start receiving benefits and also the most popular age to apply. About a quarter of men and women are collecting Social Security at age 62, while fewer than 10% of retirees wait until age 70, according to 2022 data from the Social Security Administration.
While there’s no necessarily right or wrong age to file for benefits, there are hidden dangers to filing at 62. Here’s what the average benefit would be at that age and the biggest risks of filing early.
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How much pension will the average retiree receive?
The amount of your benefit depends on several factors, including your years of service, your earnings history, and the age at which you apply for benefits.
The Social Security Administration takes the average of your earnings over the best 35 years of your career, runs it through a formula, adjusts it for inflation, and the result is the amount you’ll receive at your full retirement age (FRA), which is 67 for people born in 1960 or later.
Filing earlier than your FRA will result in a lower monthly payment, and filing as soon as possible at age 62 will permanently reduce your benefits by up to 30%.
This represents a significant reduction, potentially resulting in hundreds of dollars per month in lost benefits. In fact, according to 2023 data from the Social Security Administration, the average retiree will receive just $1,298 per month at age 62. Meanwhile, the average benefit at age 70 is about $2,038 per month.
The hidden dangers of early filing
Again, there’s no one perfect age for everyone to start taking benefits, but many seniors rely heavily on Social Security for retirement, and the precarious nature of the system means that reduced benefits make it much harder to enjoy a comfortable retirement.
More than 40% of Baby Boomers say Social Security will be their main source of income in retirement, according to a 2023 report from the Transamerica Center for Retirement Research. Even more concerning, a 2023 survey from the National Retirement Institute found that 21% of U.S. adults age 50 and older have no other source of retirement income besides their benefits.
Social Security is also no longer as reliable as it once was. A 2023 study by the Senior Citizens League, an advocacy group for seniors, found that the purchasing power of Social Security benefits has declined by about 36% since 2000. The researchers also found that to maintain the same purchasing power as in 2000, today’s retirees would need an additional $516.70 per month from Social Security.
Benefit cuts could be on the way in the next decade or so: The Social Security Administration’s latest estimates show the program’s trust fund is expected to run out by 2035. If nothing happens by then, benefits could be cut by about 17%.
What this means for you
So even though Social Security is no longer as reliable as it was in past decades, retirees still rely heavily on benefits to get by.
There are still good reasons to consider taking your benefits earlier. For example, if you have enough savings, a smaller check may not impact your retirement life that much. Or, if you have health problems that will prevent you from enjoying retirement for several decades, it may not make much sense to postpone your benefits until age 70.
But it’s important to think about how much you’ll rely on those benefits, not just now but in the years to come, if Social Security is cut or its purchasing power continues to decline. The average retiree will receive about $740 less per month at age 62 than at age 70. If Social Security is your primary source of income, these cuts could hurt.
For many seniors, claiming Social Security at age 62 can make it much harder to live a comfortable retirement. There are good reasons to consider claiming early, but an honest look at your goals and financial situation can help you determine whether it’s the right choice for you.
