Here's the Worst Age to Claim Social Security Retirement Benefits, According to Experts

When should I retire? That's a question millions of Americans begin asking as they approach their early 60s and even late 50s.

To be sure, there's no one-size-fits-all answer. However, experts seem to agree on the worst age to claim Social Security benefits.

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The early bird doesn't get the worm

For anyone born in 1960 or later, the full retirement age is 67. However, Americans don't have to wait until then to claim Social Security benefits. They can claim as early as age 62. But the consensus among experts is that 62 is actually the worst age to begin collecting Social Security from a financial perspective.

A 2019 study conducted by wealth management firm United Income found that 92% of people would be better off waiting at least until age 65 to claim Social Security. Any age lower than that threshold was sub-optimal, with 62 being the worst age.

Roughly 57% of retirees would have more money if they waited until age 70, according to the United Income study. Only 6.5% of retirees would have greater wealth by claiming Social Security benefits before age 64.

Another analysis conducted in 2022 by David Altig with the Federal Reserve Bank of Atlanta, along with Boston University's Laurence J. Kotlikoff and Victor Yifan Ye, reached a similar conclusion. These three researchers determined that "virtually all American workers age 45 to 62 should wait beyond age 65 to collect. More than 90 percent should wait till age 70." Their study implied that 62 was the least optimal age to claim Social Security retirement benefits.

Why experts advise against claiming Social Security at 62

It isn't surprising that many experts advise against claiming Social Security at age 62. The retirement benefits at that age are much lower than at later ages.

The Social Security Administration (SSA) will reduce benefits by five-ninths of 1% for each month a person collects Social Security before his or her full retirement age for up to 36 months. If the person begins collecting Social Security more than 36 months before the full retirement age, the benefit is reduced by five-twelfths of 1% per month. If your full retirement age is 67, claiming Social Security at age 62 will translate to a 30% lower benefit than you'd receive at 67.

On the other hand, waiting until after your full retirement age can boost your Social Security benefits. Delayed retirement credits of 8% per year will be awarded through age 69. Holding off on claiming Social Security can increase your benefits, therefore, by up to 24%.

There's also another factor to consider. Social Security benefits are calculated based on a person's 35 highest-earning years of work. Since many Americans earn more money later in their careers, waiting to collect Social Security can increase their benefit payments as the higher-income years later in life replace lower-income years from when they were younger.

What about the option of claiming Social Security at age 62 but continuing to work? The main drawback to this approach is the early retirement earnings test. SSA will "claw back" benefits if your income is above specified thresholds. Although you will receive the withheld money once you reach your full retirement age, many individuals find that the negatives outweigh the positives with this strategy.

Are many Americans making a big mistake?

Nearly one in four Americans claims Social Security at age 62. Are they making a big mistake? Not necessarily.

Sure, many experts agree that 62 is the worst age statistically to collect Social Security from a financial perspective. But the two words in that statement to especially note are "statistically" and "financial."

There are always outliers in statistics. For example, a person with an expected longevity of only 10 years would be better off claiming Social Security as early as possible rather than waiting. Collecting early retirement benefits could be a lifesaver for an individual who loses her job at age 62 and can't find another position.

Also, when to retire and when to claim Social Security are decisions that involve more than just financial considerations. Retirement planning should include many other factors in addition to finances, such as your health and your retirement goals. While 62 might not be the optimal age to collect Social Security from a financial perspective, it could make sense when all things are considered.

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