Social Security Benefits: Early Payout or Full Retirement Age?

December 5th, 2011, by

Q: I am fast approaching 62 years of age and recently unemployed. My husband’s income is not enough for all of our bills. If I cannot locate a job soon, should I apply for Social Security benefits to supplement our income or try and wait it out until age 66 (full retirement age)? I’m afraid if we wait, we might end up filing for bankruptcy.

Columbia, SC

A: I’m sorry you are going through such a tough time and during your senior years when so many people hope to be financially secure.

Of course you can take an early payout at 62, but you get a reduced monthly amount. However, if you wait until your full retirement age, you get more in your monthly benefit. If you wait until you turn 70, you get an even larger check. So, for example, let’s say your monthly retirement benefit at your full retirement age of 66 would be $1,000. If you take it at 62 instead, you would get $750, a 25% reduction, according to estimates by the Social Security Administration.

“As a general rule, early or late retirement will give you about the same total Social Security benefits over your lifetime,” SSA says. “If you retire early, the monthly benefit amounts will be smaller to take into account the longer period you will receive them. If you retire late, you will get benefits for a shorter period of time but the monthly amounts will be larger to make up for the months when you did not receive anything.”

So, in the grand scheme, depending on your life expectancy, early or late, you end up with about the same amount of money.

More than half of those claiming retired worker-benefits in 2009 elected to receive them as soon as they turned 62, according to AARP. Many seniors are taking their benefits at 62 because, like you, they need the money and can’t afford to wait.

Considering your situation, you don’t have the financial flexibility to wait until your full retirement age to take your benefits. So, take the money now because you need it.

Last modified: December 5, 2011 at 1:24 pm