Claiming Social Security at 62 vs 67 vs 70: The Math

Walk into any retirement planning seminar and you'll hear someone ask: 'When should I claim Social Security?' It's one of the most consequential financial decisions you'll make, yet most Americans struggle with it. Should you grab that money at 62 and enjoy it now? Wait until full retirement age? Or hold out until 70 for the maximum benefit?

Here's what makes this decision so tricky: you're essentially betting on your own lifespan, your financial needs, and your future health. And unlike most financial decisions, this one is largely irreversible once you make it.

Let's look at what the numbers actually show, without the hype or oversimplification you'll find elsewhere.

Let's start with a concrete example. Say your full retirement age (FRA) is 67, and your benefit at that age would be $2,000 per month. Here's how your claiming age affects your monthly check:

• Age 62: $1,400/month (30% reduction)
• Age 67: $2,000/month (your full benefit)
• Age 70: $2,480/month (24% increase)

That's a difference of $1,080 per month between claiming at 62 versus 70. Over a year, that's nearly $13,000. Sounds like waiting is the obvious choice, right?

Not so fast. By claiming at 62, you receive 60 months of payments before the person who waits until 67 gets their first check. That's $84,000 in your pocket ($1,400 x 60 months). The age-67 claimer needs their larger monthly check to eventually catch up to your head start.

This is where it gets interesting. The breakeven point is when the total amount received by waiting surpasses what you would have gotten by claiming early.

Claiming at 62 vs. 67: Using our example above, by age 78-79, the person who waited until 67 will have received roughly the same total amount as the person who claimed at 62. After that point, waiting wins financially. Before that point, claiming early wins.

Claiming at 62 vs. 70: The breakeven point typically falls around age 80-81. The person who waits until 70 needs to live into their early 80s to come out ahead of someone who claimed at 62.

Claiming at 67 vs. 70: This breakeven usually happens around age 82-83. The three-year delay needs about 12-15 years of higher payments to catch up.

These breakeven calculations assume you simply receive the money. They don't account for what you might do with it (more on that shortly).

The pure math only tells part of the story. Here are the factors that should heavily influence your decision:

Your Health and Family Longevity: If you have serious health conditions or your family history suggests a shorter lifespan, claiming earlier makes more sense. If you're in excellent health with longevity in your genes, waiting can pay off significantly. The average 62-year-old man can expect to live to about 82; the average woman to about 85.

Whether You're Still Working: Here's a critical detail many people miss. If you claim benefits before your full retirement age and continue working, the Social Security Administration will reduce your benefits if you earn more than $22,320 (2024 limit). They withhold $1 for every $2 you earn above this limit. Once you reach full retirement age, this penalty disappears entirely. This alone might make early claiming a poor choice if you plan to work.

Your Other Income Sources: Do you have a pension, rental income, or significant retirement savings? If you have other income to cover your expenses, delaying Social Security allows those monthly checks to grow while you spend down other assets. This can also have tax advantages.

Spousal and Survivor Benefits: If you're married, the equation gets more complex. The higher earner's claiming decision affects the survivor benefit. When one spouse dies, the surviving spouse gets the higher of the two benefits. If you're the higher earner, waiting until 70 can provide crucial protection for your spouse.

Social Security benefits can be taxable, and your claiming strategy can affect your tax bill. Up to 85% of your Social Security benefits may be taxable if your 'combined income' (adjusted gross income + nontaxable interest + half of Social Security benefits) exceeds certain thresholds.

For single filers, if your combined income is between $25,000 and $34,000, up to 50% of benefits may be taxable. Above $34,000, up to 85% may be taxable. For married couples filing jointly, the thresholds are $32,000 and $44,000.

This creates an interesting planning opportunity. If you have significant IRA or 401(k) withdrawals in your 60s, delaying Social Security might keep you in a lower tax bracket. Conversely, if you're doing Roth conversions or have high medical expenses early in retirement, taking Social Security early might actually reduce your overall tax burden.

Some financial analysts argue that if you claim at 62 and invest those early payments, you could come out ahead of waiting. The logic: your $1,400 monthly payment invested at, say, 6% annual returns, could grow significantly.

However, this strategy has limitations. First, you need the discipline to actually invest rather than spend the money. Second, those returns aren't guaranteed, especially when you factor in market volatility and the taxes you'll pay on investment gains. Third, Social Security benefits include an implicit 'return' through annual cost-of-living adjustments (COLA) that protect against inflation.

Social Security is essentially a guaranteed, inflation-adjusted annuity backed by the U.S. government. That's hard to replicate in the investment world, especially for the risk-averse portion of your portfolio.

Scenario 1: You need the income now
If you've lost your job, have insufficient retirement savings, or face unexpected expenses, claiming at 62 might be your only realistic option. Don't feel guilty about this. Social Security is your money, earned through decades of work. Sometimes the 'optimal' mathematical choice isn't the practical one.

Scenario 2: You're healthy, wealthy, and still working
If you're in good health, have other income sources, and plan to work past 62, waiting until 70 often makes the most sense. You maximize your monthly benefit, avoid the earnings penalty, and create the largest possible survivor benefit for your spouse. This is especially true if you're the higher earner in a married couple.

Scenario 3: You're somewhere in between
This is where most people land. You could wait, but you'd like to retire sooner. You're healthy, but who knows what the future holds. For this middle ground, claiming at your full retirement age (66 or 67) often provides a good balance. You get your full benefit without reduction, but you don't have to wait until 70. You also avoid the earnings penalty if you want to do some part-time work.

Rather than relying on rules of thumb, take these steps to analyze your personal situation:

1. Get your actual benefit estimates. Create a 'my Social Security' account at ssa.gov to see your projected benefits at different claiming ages based on your real earnings history.

2. Calculate your breakeven points. Use the specific numbers from your Social Security statement to see when waiting would pay off for you personally.

3. Factor in your health. Be honest about your health status and family history. If most of your relatives lived into their 90s and you're in great health, that's valuable information.

4. Consider your spouse. If you're married, run the numbers for both of you, considering survivor benefits and the fact that one of you is likely to live longer than the average.

5. Look at your complete financial picture. How much do you have in retirement accounts? Do you have a pension? What are your expected expenses? Social Security shouldn't be viewed in isolation.

The Social Security Administration offers calculators on their website, but you may also want to use retirement planning tools or work with a financial advisor to model different scenarios.

If you're frustrated that there's no clear answer, you're not alone. The 'right' claiming age genuinely depends on your circumstances. That said, here's what the numbers consistently show:

• If you're in poor health or desperately need the income, claiming early makes sense despite the reduced benefit
• If you're healthy, have other income, and especially if you're a high earner with a spouse, waiting until 70 often maximizes your lifetime benefits
• If you're uncertain, claiming at your full retirement age is a reasonable middle ground
• Working while claiming before full retirement age usually doesn't make financial sense due to benefit reductions

Remember, this decision isn't set in stone the moment you think about it. You have time to plan, and your circumstances may change. What's important is understanding the tradeoffs so you can make an informed choice that aligns with your retirement goals, health status, and financial needs.

The best claiming strategy isn't the one that looks best on a spreadsheet. It's the one that lets you sleep at night and supports the retirement lifestyle you want to live.

Important Disclaimer: This article provides educational information about Social Security claiming strategies but does not constitute financial advice. fidser. is not a certified financial planning firm, and we do not provide personalized financial advice. Your optimal claiming strategy depends on your unique circumstances, including health, financial situation, and family considerations. Please consult with a qualified financial advisor or Social Security expert before making any decisions about when to claim your benefits.