File For Social Security at 62 or 70: Who Wins?
Category: Social Security
December 18, 2024 — The subject of when to take Social Security is one of the most hotly debated retirement topics. Although the system was designed for both decisions to be equal, there are plenty of proponents for each approach.
Case Study – High Earners
Let’s explore the following case. Two people aged 76 made the maximum contribution to Social Security during their 35 year working careers. One files for benefits at the first opportunity (62), the other waits to get the max benefit at age 70 We wanted to find out who comes out ahead, and when. So we asked AI to do the calculations for us. The results came back instantly, and judging from the sources they used, they look accurate. Here is what we found:
Total Benefits Received
The person who claimed at 62 started receiving benefits 14 years ago, while the other began 6 years ago:
Comments on "File For Social Security at 62 or 70: Who Wins?"
Mike says:
Amazed at the quality of analysis! Great idea to use AI to analyze.
PE says:
the "Life Expectancy Tables" link does not work
Steve says:
I agree but with one (maybe two?) caveats, COLAs & Taxes are not figured into the break even point. Case in point: I turned 62 in 2017 and started receiving benefits, my initial benefit was $2,037/mo. After 10 months I decided to withdraw and paid back all benefits received. Fast forward to 2025, my projected benefit at 70 will be $4,693/mo! I calculated the COLA effect on my early (62) benefit and it would be $2,682/mo. Then I fast forward to see the break even date WITH COLAs and it’s between 78 & 79. I used 2.5% COLA going forward and actual going back.
Taxes do have an affect on break even too, SS benefit is tax favored- at most 85% of your benefit is taxed, however if that is your only source of income it would be taxed at 0%, which will be my tax rate since I converted my entire IRA to Roth over the past 10 years.
Vicki williams says:
I saw an article awhile ago about taking SS at 62 then stopping around 67, then starting again at 70 when benefits would increase greatly. Is this possible?
Rufus says:
In my case I started receiving benefits at age 62. I did it because my job was very physical and I wanted to go into retirement reasonably healthy in terms of joint damage. I was self employed. I continued working at my job part time to supplement my S.S. without going above my earning limits so as not to be penalized. All that to say there are multiple options. The analysis in this article was very well done however I was definitely taken aback at the idea of retiring after working only 35 yrs. That sure wasn't my world. For me, 48 yrs. I am now 71 and I have zero regrets about taking benefits at 62.
JD says:
Breakeven calculations are worthless. The only way to know when the "optimum" time (financially) to start taking Social Security is if you know the exact day you are going to die and unless you are planning your own suicide you don't know that. After analyzing and pondering this question for years I came to the conclusion that the only valid answer to "When should I take Social Security?' is "When I need it."
Admin says:
Thanks PE, we have corrected that link, and also one that goes to how Social Security calculates benefits. Good catch, and thanks for letting us know!
JCarol says:
When we made the decision to delay the larger of our two benefits, the breakeven point was 78.8 (as it still is).
We were born in 1952 and a loophole that we took advantage of has since closed: I filed for SS at 65. When he turned 66, my husband filed for 50% spousal benefits, so our personal breakeven point will come earlier than 78.8.
Even without that loophole we'd have delayed filing benefits against his earnings until 70. Our parents all lived into their 90s, as did nearly all of our grandparents and many of our great-grandparents. In the likely case that one of us predeceases the other, DH's benefits delay and resulting larger check will undoubtedly come in handy.
Note: SS breakeven points are based on male actuarial tables. (Men who make it to 62 can expect to survive to 78.9 years old. Women at 62 are expected to make it to 84.) Breakeven points for filing anywhere between 62 and 70 converge at 78.8 years. After that, it's beneficial to have delayed benefits. I'm rather mystified about the above analysis being based on reaching 74 instead of 78 or beyond.
https://www.socialsecurityintelligence.com/calculators/social-security-break-even-calculator/
https://www.ssa.gov/oact/STATS/table4c6.html
Admin says:
One thing that makes some people decide to collect early is the reality of SS running out of Trust Funds in the early 2030's. Assuming you will only collect about 80% of promised benefits at that time, should that help decide which option to take?