Title: Three Reasons I Opt Out of Collecting Social Security at 62
Embracing retirement at 62 might be the dream for many, but I've got different plans. Here are three reasons why I won't rush to claim Social Security retirement benefits at 62:
1. I prefer to keep working
For most of my career, I've been knee-deep in office jobs with tight deadlines and high pressure. With that in mind, I can understand why someone would be eager to retire as early as possible and claim their Social Security benefits at 62.
But right now, I'm writing about investing, personal finance, and retirement planning. I love what I do, and it's less stressful than my past jobs. While I plan to reduce the amount I work when I turn 62, I expect to earn enough that my Social Security benefits would be minimal if I file at that age.
The Social Security Administration imposes an early retirement earnings test. If you're younger than your full retirement age (FRA) in 2025 for the entire year, $1 is deducted for every $2 you earn above $23,400. This means if you earn $83,400 or more in a year and your Social Security benefits are $30,000, all of your benefits will be withheld. You'll receive them back when you reach your FRA, but I'd rather hold onto the money instead of waiting for it.
2. I value a safe return on investment
There's a steep penalty when you claim Social Security benefits before your FRA. If I started receiving retirement benefits at 62, I'd receive 30% less than if I waited until my FRA of 67. But if I hold off until age 70, my benefits increase by 24%.
Importantly, I won't miss out on the annual Cost-of-Living Adjustments (COLAs) by delaying when I claim Social Security benefits. The Social Security Administration will adjust my benefits each year to reflect any increases from the COLAs.
Could I make a higher return by claiming Social Security at 62 and investing the money instead of living off of it? Maybe, if I actually received the benefits instead of having them withheld for my earnings. But I prefer the idea of a safe, inflation-adjusted return on investment that comes with waiting to claim Social Security.
3. I expect to live well into my 80s
If I had concerns about dying in my 60s or early 70s, I'd probably retire at 62, claim Social Security, and make the most of my time left. But I expect to live at least into my 80s. Many of my relatives have done the same, so I'm hopeful that I'll be able to enjoy a higher Social Security retirement benefit for a long time.
Of course, unforeseen events could change things. But for now, I plan to hold off on claiming Social Security and enjoy the benefits that come with waiting.
Your situation might be different. The Social Security Administration advises that the "best age" for receiving benefits simply doesn't exist for everyone. It's ultimately your choice.
I understand the importance of financial planning for retirement, and I'm currently saving and investing to ensure a comfortable retirement. Despite my early retirement dreams being different, I'm aware that by delaying my Social Security benefits past 62, I could potentially increase my retirement income due to higher benefit amounts and Cost-of-Living Adjustments.
