Why Workers Sign Up for Social Security at Age 62

Claiming Social Security at age 62 is appealing for some, but if they waited even a few years it would net them a larger payout.

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Black businesswoman smiling in office
Getty ImagesMany workers claim Social Security as soon as possible, but they might regret that decision later.
By Emily Brandon

The most popular age to sign up for Social Security is 62, with 32 percent of men and 38 percent of women born in 1946 claiming benefits at that age. Starting benefits at age 62 provides valuable retirement income as soon as possible, but it also triggers a reduction in monthly payments because retirees collect them over a longer period of time. A 62-year-old who signs up for Social Security in 2014 will get 25 percent smaller checks than if he waited to claim at age 66, his full retirement age. Here's why many retirees claim Social Security at 62, even though it results in significantly smaller monthly payments.

Already out of the workforce. People who are unemployed at age 62 and unable to find a new job often sign up for Social Security to bring some income into the household. "Some people who did not plan to sign up at age 62 may have experienced a job loss during a bad economy, and they need the income," says Andy Landis, author of "Social Security: The Inside Story." Those who are employed full time between ages 60 and 62 are 30 percent less likely to claim Social Security early than those who no longer work full time, according to a new Government Accountability Office report. "Many unemployed older workers struggle to find new jobs and may face unique re-employment challenges, such as employer reluctance to hire older workers or out-of-date skills. And, long-term unemployment can motivate older workers to claim early Social Security," according to the report.

A strenuous job. People who work in physically demanding jobs including mechanics, construction, precision production, operators and farming are 55 percent more likely to claim Social Security benefits early than workers in other fields, GAO found. Those in managerial and professional jobs are 32 percent less likely to sign up early than other occupations. Workers without a college degree were also 23 percent more likely to claim early.

Have worked a long time. The 35 years in which you earn the most are used to calculate your Social Security payments. Those who haven't worked that long have zeros averaged into their calculation, which significantly reduces payments. Those who have worked at least 35 years by ages 60 through 62 are about 38 percent more likely to claim Social Security early compared with those with shorter work histories. "For people who have gaps in their earnings history, working a little bit longer to fill in the gaps can make a big difference in your Social Security payout," says William Meyer, founder and managing principal of Social Security Solutions, a company that analyzes Social Security claiming strategies. "If you work a little bit longer and you have a higher earnings year that can replace a lower earnings year, then it can be worthwhile."

The financial crisis. The financial crisis of 2008 caused a spike in Social Security claiming. Those who were laid off during the wave of employment in 2009 were much more likely to claim Social Security early versus people who separated from their jobs in other years, the GAO found.

Don't expect to live a long time. How long you think you will live plays a role in when you sign up for Social Security. The GAO found that those who expect to live to at least age 75 are significantly more likely to delay claiming benefits than those with lower expectations. "If an individual perceives they have a relatively lower chance of living to reach average life expectancy, they may believe it is advantageous to claim early so that they can receive benefits for more years before they die," according to the report. But if you end up living longer than expected, waiting often pays off. "If you are in your 60s, your life expectancy is mid-80s, so unless you do have a reason to believe you will have a short life expectancy, on average, you will get more if you wait until 70," Landis says.

It's also important for married individuals to base their claiming decisions on their joint life expectancy. When one member of the couple dies, the surviving spouse can inherit the deceased spouse's Social Security payment amount if it's higher than what he or she is already receiving. "If you get the higher earner's benefit as high as possible, the payout tends to go to the surviving spouse," Meyer says.

After paying into the system for decades, it's tempting to start your Social Security payments as soon as you can. But the decision to sign up for benefits deserves careful consideration. "The optimal claiming decision for each individual depends on many factors, such as expected mortality, employment opportunities and health," GAO found. "While our findings demonstrate the financial advantages of delaying claiming until the full retirement age, this does not necessarily mean that everyone would be better off delaying."

Emily Brandon is the senior editor for Retirement at U.S. News. You can contact her on Twitter @aiming2retire, circle her on Google Plus or email her at ebrandon@usnews.com.


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RICH

My dad was a poster boy for SS; worked all his life and paid in since the inception of SS; quick kicked at age 59; collected zero. Guess why I started collecting ASAP?

July 09 2014 at 12:00 PM Report abuse rate up rate down Reply
Ely Summers

This story is a load of horse manure. I worked for 20 years in jobs that paid into SS.. As soon as I started working for state government I was ineligible for SS benefits of any kind> If you are not thinking in your 20-30's about retirement, you are going to be sorely disappointed.. I'm 57, hubby is 54 and we have paid off our mortgage. We are living like we're retired and not suffering at all. FOCUS people. You only have one chance.

July 05 2014 at 7:36 PM Report abuse rate up rate down Reply
Mike

TAKE THE MONEY AT 62!!!!....You'll be 82 years old before you start "losing" money on the monthly checks....in those four years from 62 to 66, someone getting $1200 a month will collect $57,600 that you wouldn't normally have.....if you wait until you are 66 you get $1500 a month....now you have to make up that $57,600 in $300 blocks....thats 192 months (16 years) or 66+16 = 82 yrs old.....and that assuming you do NOTHING with that $57,600 from an investment standpoint.....and you can guarantee me that I'll live to 82?....would you rather have that extra money when you are 62 or when you are 82.....c'mon people, get a clue!!!.....take the money at 62.....if you die between 62 and 66 you get a check for $260.....Haa!!!

July 04 2014 at 1:27 AM Report abuse rate up rate down Reply
mvr1464

It's a Ponzi scheme, it should be illegal. Let me invest my hard earned dollars as I see fit so I won't have to worry if it will still be around when I get to retirement age. Don't you old farts feel bad living off the hard earned dollars of what's left of our workforce?

July 03 2014 at 2:52 PM Report abuse rate up rate down Reply
hsstempe

do the math, in most cases you won't live long enough to collect the difference in NOT taking it. it's your's, if ya don't need it, bank it in your mattress so it cannot be taxed again and again and again and again and again.. ad infinutum........and one more time again!

July 02 2014 at 12:02 PM Report abuse +2 rate up rate down Reply
happy2bgridfree

Collect at 62, before you are too sick, old ( or DEAD ) to enjoy it. The gov't is hoping you'll croak before you collect.

July 02 2014 at 11:44 AM Report abuse +4 rate up rate down Reply
unitedpaintings

Collect as early as possible, and get back what the Government confiscated from you for decades.

July 02 2014 at 10:05 AM Report abuse rate up rate down Reply
heavywilliams

Think many people believe that SS will not be there for them at retirement. We all hear the Going broke story line, or, Will "SS will run out" hysteria. People eat that up, think better take it now while it's there, may not be there, or, at lease people should get ready for significantly lower payouts. No way the Boomers don't crush SS. Not enough paying into system in 10-15 yrs.......so better take it now mentality.

July 02 2014 at 9:55 AM Report abuse rate up rate down Reply
quickdraw0222

d barack obama are you still mad that your daughter ran off with a black man

July 02 2014 at 9:49 AM Report abuse -1 rate up rate down Reply
1 reply to quickdraw0222's comment
unitedpaintings

Are you?

July 02 2014 at 10:04 AM Report abuse rate up rate down Reply
frank1946

Pick the mid-point, age 64.......................makes good sense, unless you are feeble and sick.

One way or the other you benefit !

July 02 2014 at 9:07 AM Report abuse rate up rate down Reply