Retirees Delaying Social Security

The Wall Street Journal reported on Wednesday that the number of retirees claiming Social Security at age 62, the earliest you can begin taking payments, is falling.

For decades, data from the Social Security Administration have indicated that a fairly consistent share of workers — about 60% of women and about 52% of men — have claimed a Social Security check at 62, the earliest age at which most people qualify for benefits. Of course, collecting Social Security before “full retirement age,” which is climbing gradually to age 67, results in a permanent reduction in a person’s monthly payout.

If you take payments at 62, you get more payments but your total assumed benefit is lower. If you wait until your full retirement age, which varies based on some personal factors, you get the maximum payment possible. So by waiting, you increase the total benefit but you get to enjoy it a few years later.

Also, by waiting, you have the added benefit of not being penalized for working. If you earn more than a certain amount, and this varies based on your birthday, your benefits are reduced by a certain fraction based on your wages. This is earned income, so money from investments (capital gains, dividends) don’t count in this. For more information, read the SSA’s page on how work affects your benefits.