Retiring at 62 is a popular goal among many Americans. After decades of working, the thought of enjoying more free time earlier in life is appealing.
The Social Security Administration (SSA) allows individuals to begin collecting benefits at age 62, the earliest eligible age. However, this choice comes with a permanent reduction of up to 30% in monthly benefits.
While the reduction seems steep, early retirement can make sense for some depending on health, financial needs, and lifestyle plans.
How Much Do You Lose by Retiring at 62?
Your Full Retirement Age (FRA) ranges from 66 to 67, based on your birth year. If you start collecting Social Security before your FRA, your monthly benefits will be permanently lower.
Here’s a table showing estimated monthly and annual benefits at age 62 based on different income levels:
| Annual Pre-Retirement Income | Monthly Benefit at 62 | Annual Benefit |
|---|---|---|
| $30,000 | $787 | $9,444 |
| $50,000 | $1,051 | $12,616 |
| $150,000 | $2,196 | $26,352 |
This illustrates that higher lifetime earnings result in higher benefits—but starting at 62 still means receiving reduced payouts for life.
What You Sacrifice by Starting Early
If your full retirement benefit at 67 is $2,000, retiring at 62 would reduce that to $1,400—a 30% cut.
- Monthly loss: $600
- Annual loss: $7,200
- Loss over 20 years: $144,000
This permanent reduction can significantly impact long-term financial stability, especially for retirees who live into their 80s or 90s.
Why Some Retirees Still Choose 62
Despite the loss, retiring at 62 may be the right decision in some scenarios:
- Health issues limit your ability to work.
- You want to enjoy retirement while you’re still active.
- You have additional income sources such as savings or a pension.
- You’re planning a modest lifestyle with lower monthly expenses.
In these cases, accessing smaller Social Security benefits earlier may outweigh waiting for a higher payout.
Delaying Retirement Pays Off
If you can wait, your benefits increase significantly:
| Retirement Age | Percent of Full Benefit Received |
|---|---|
| 62 | 70% |
| 64 | 80% |
| 66 | 93% |
| 67 | 100% |
| 70 | 124% |
Delaying until age 70 means you could receive up to 24% more than your full benefit. For someone with a full benefit of $2,000, waiting until 70 boosts that to around $2,480 per month—a significant gain.
How to Make the Right Choice
Before making your decision, consider these key steps:
- Check your benefit estimates by creating an account at SSA.gov.
- Compare monthly payouts at ages 62, 66, and 70.
- Consult a financial advisor to weigh the long-term impact.
- Evaluate your savings, health, and retirement goals.
- Think about how long you expect to live, based on personal and family history.
Retiring at 62 can lead to a 30% loss in Social Security benefits, but for many Americans, it still may be the best option.
If you’re facing health challenges, need the money sooner, or have a strong financial cushion, the early access to benefits can offer peace of mind and freedom.
That said, those who can wait until full retirement age or even 70 will enjoy significantly higher monthly payments, making their later years more financially secure.
Ultimately, there’s no one-size-fits-all answer. The best decision depends on your health, financial readiness, and personal goals.
FAQs
How much does Social Security decrease if I retire at 62?
Retiring at 62 results in a permanent reduction of up to 30% compared to your full retirement benefit.
Is it better to wait until 70 to claim Social Security?
If you can afford to wait, claiming at 70 increases your monthly benefits by up to 24% above full retirement age payouts.
Can I still work if I claim Social Security at 62?
Yes, but earnings limits apply until you reach your full retirement age. Excess earnings may temporarily reduce your benefits.