Is 62 the Right Age to Claim Social Security? Here's What the Data Says.

There are a handful of important decisions someone must make leading up to retirement, but one of the more important ones is when to claim Social Security. Your claiming age will permanently affect how much you receive in benefits, so the decision isn't one to gloss over.

You can begin claiming benefits at age 62, but doing so will reduce your monthly benefit by 30% (assuming your full retirement age is 67). The reduced benefit may not sound ideal, but it's the tradeoff you make by receiving benefits on the earlier end of retirement.

Given the trade-off, is 62 the right age to claim benefits? Let's take a look.

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Always look at your breakeven age

One of the best ways to see whether the tradeoff of claiming at 62 is worth it is to look at different breakeven ages. In Social Security, your breakeven age is when the total lifetime benefits received from claiming at one age equals those of claiming at another age.

To see breakeven age in action, let's assume your monthly benefit at your full retirement age (called your primary insurance amount) is $2,000. That means claiming benefits at 62 would reduce your benefit by 30% to $1,400 (again, assuming your full retirement age is 67).

Here are the breakeven ages between 62 and 63 through 70:

Calculations by author. Total benefits received are based on the exact break-even month.

Anytime before these breakeven ages, claiming benefits at 62 would mean more lifetime benefits than the alternative age. Anytime after the breakeven ages, the roles reverse, and lifetime benefits are higher by claiming later than 62.

The data is on the side of waiting

To put the breakeven age into perspective, it helps to also look at it alongside life expectancies (based on Social Security's statistical life expectancy).

According to Social Security data, a man has an average remaining life expectancy of 19.61 years once he turns age 62 (around 81.6 years total). A woman has an average remaining life expectancy of 22.5 years at 62 (84.5 years total).

If we assume that someone lives until those life expectancies, he or she would have outlived each of the breakeven ages for ages 63 through 70. That means, statistically speaking, both men and women would be better off waiting until a time after 62 to claim benefits. Considering women have a longer life expectancy, delaying past 62 is even more beneficial.

Using our example, if that person lives until 85, he or she would have received $60,000 more in lifetime benefits by claiming at 70 than by claiming at 62. If the person lives until 90, it would be $124,800 more.

A claiming decision should be multifaceted

Statistics aside, it's important to remember that there is no perfect age to claim Social Security, only the age that makes sense for your situation.

Many people rely on Social Security for all or most of their retirement income, so they may not have the liberty to delay benefits because they need the money to survive. The same goes for someone who may have a personal or family history of health issues. If that realistically lowers your life expectancy, it may make sense to take benefits as soon as possible so you can enjoy them earlier.

If you have a nice nest egg in your retirement accounts and investments and won't need Social Security for your retirement plans, the decision to delay benefits becomes a lot easier.

It's important to consider multiple factors when deciding when to claim Social Security. They each may not hold the same weight, but you don't want to leave any stone unturned.

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