May 27, 2022
  • May 27, 2022

Early retirement ? Here is the best social security income at 62

By on July 11, 2021 0

Oone in five Americans claims Social Security benefits at age 62, the youngest possible age. If you plan to be one of them, know that the maximum you can collect in Social Security income at that age this year is $ 2,324 per month.

Qualifying for this amount is difficult, however. Social security is based on your historical income and pocketing the maximum at age 62 requires a work record of 35 years of income above the annual limit for social charges. This is a big demand considering that the payroll tax limit is $ 142,800 in 2021. For this reason, your social security check at 62 is much more likely to be below the maximum, which makes it more attractive. to wait until full retirement age or later. to claim benefits.


Claiming early means a big penalty

Yes, you can claim Social Security at age 62, and there are good reasons why many retirees choose to do so. For some, pretending to be younger allows for a more active lifestyle, and for others with health complications, this might be the best strategy to reap the most lifetime benefits.

Claiming early, however, comes at a high cost. The calculation of Social Security income is designed to replace around 40% of average pre-retirement income, but this is only true if the recipient waits to claim benefits at full retirement age (FRA) , which ranges between 66 and 67 for Americans born after 1954. If you apply for benefits at age 62, you may see a reduction of up to 30% in your monthly benefit amount due to the filing penalty. anticipated.

Amounts of benefit reduction at age 62
Full retirement age Reduction
66 25%
66 and 2 months 25.83%
66 and 4 months 26.67%
66 and 6 months 27.50%
66 and 8 months 28.33%
66 and 10 months 29.17%
67 30%


The trick to getting the maximum at 62

To qualify for the highest possible payout at age 62, you need to accomplish several things. First, you must have 35 years of work experience with income subject to payroll taxes, and second, you must have income at or above the payroll tax limit for each of those years.

Why? Because Social Security determines your monthly benefit by adjusting your highest 35 years of income for inflation, then calculating your average earnings over that period. Work under 35 and Social Security uses zeros in its calculation for those years, preventing you from getting the maximum benefit. Likewise, earn less than the maximum subject to payroll tax in each of those 35 years, and you won’t qualify either.

If you can be flexible, patience pays

In 2021, the maximum amount you can collect for benefits if you claim at age 62 is $ 2,324, but if you qualify for the maximum and your full retirement age is 66, then wait until then. to start your benefits entitles you to $ 3,113 per month. That’s a big increase for waiting five years or less to file for Social Security.

Your patience earns you even more money if you can wait until age 70 to claim because of late retirement credits. These credits increase your benefit amount by 2/3 of 1% for each month beyond your FRA that you delay, up to age 70. This equates to an 8% annual reward just for your patience. As a perspective, the maximum social security for people in their 70s claiming social security this year is $ 3,895, which is 67.6% more than the maximum payable to someone claiming this year who is 62. .

Maximum social security if you retire in 2021
Age Per month Per year
62 $ 2,324 $ 27,888
66 $ 3,113 $ 37,356
70 $ 3,895 $ 46,740


Of course, when to claim Social Security is a personal decision that depends on your health, your retirement goals, your sources of retirement income, and your expenses. However, if you want the maximum social security possible, it might make more sense to suspend the claim at 62, even if you are not entitled to the largest monthly benefit.

The $ 16,728 Social Security bonus that most retirees completely ignore
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “social security secrets” could help you boost your retirement income. For example: a simple tip could net you up to $ 16,728 more … every year! Once you learn how to maximize your Social Security benefits, we believe you can retire with confidence with the peace of mind we all seek. Just click here to find out how to learn more about these strategies.

The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.