Should You Take the Money and Run at 62? Social Security Could Be Cut 22% in 2032.
Category: Social Security
The word is getting out: If Congress doesn’t act, Social Security retirement benefits could be cut by about 22% in late 2032. That’s just six years away, and it has a lot of people spooked.
The result? More Americans approaching retirement are apparently thinking about claiming Social Security at the earliest possible age, 62. Their logic is understandable.
Take the Money and Run – is That Really the Smartest Strategy?
For years, Social Security experts have generally advised people who can afford to wait to delay claiming, sometimes all the way to age 70. Waiting produces a substantially larger monthly benefit for life. But with Social Security’s retirement trust fund projected to be depleted in 2032, even some retirees who understand the advantages of waiting are having second thoughts.
A Lack of Understanding
Shedden believes that most Americans don’t understand enough about how Social Security works to make an informed decision. They don’t appreciate that waiting to claim pays off. Delaying benefits from their Full Retirement Age (currently 67) to age 70 results in an 8% increase in benefits, per year. Annual COLAs would apply to the higher figure. And a surviving spouse gets that higher benefit if it is higher than their own.
Does Claiming at 62 Beat Waiting Until 70 if Benefits Are Cut 22%?
Consider someone turning 62 in 2026 whose full retirement age benefit would be $2,000 a month.
Claim at 62: About $1,400/month
Wait until 70: About $2,480/month
If Social Security benefits are cut 22% in 2032, the person who claimed early would see the $1,400 check fall to about $1,092. The person who waited until 70 would receive about $1,934 after the same cut.
The advantage of claiming at 62 is that you collect roughly six years of benefits before the projected cut—giving you a head start of about $125,000.
But after age 70, the person who waited receives about $842 more every month. In this simplified example, the early claimant stays ahead until roughly age 83.
Bottom Line
A 22% cut makes claiming early somewhat more attractive, but it doesn’t eliminate the financial advantage of waiting for people who live well into their 80s. And claiming at 62 does not protect you from a future benefit cut. Talk with your financial advisor before you make any decision – this one is important.
Comments on "Should You Take the Money and Run at 62? Social Security Could Be Cut 22% in 2032."
JeffD says:
You know, in 1983 we were 3 months away from a benefit cut when Congress finally got serious and "saved" Social Security. Unless a bunch of Congresscritters want to be former Congresscritters, there will be a "solution" before benefits will need to be cut. Don't worry, be happy.
Yolande says:
LOL thanks JeffD for the laugh. The current "Congresscritters" as you refer to them are not too bright. I worry they don't take anything seriously, therefore don't trust them to do the right thing ever. I want them all turfed out anyway, we need change and fresh ideas from younger candidates. I for one am tired of hearing the issues with SS. A friend of mine & I are discussing taking early retirement. She'll be 65 in Feb. I'm 66 & will be 67 in April. I lost my job & don't have much $$ on hand to sustain a long stint of unemployment.
She's tired of working and wants to take the time to raise her granddaughter that is having a lot of problems. I have to take it this year against my will if I want to sustain myself. So it's happening this year if I can get approval from SS. They're slow so I'm calling today to get the scoop on what needs to happen. I've just noticed as I age that everyone expects us to just die and get out of their hair.
I say to all of the younger gens today they will be lucky to live as long as we have. They're killing each other faster than people can spit them out. I say take it if you are able to and see what happens. Better to be safe than sorry. Most young people today don't want to work, and that's how SS is funded. I wanted to wait but the job loss prevents me from doing so. I have to bite the bullet and take it. I don't like the income restrictions placed on retirees by SS, because it tells you why there are so many elderly that are homeless. Govt. should get out of the business of trying to take care of citizens and do what they were originally set up to do. Meddling in finances and running up extremely high deficits wasn't it. The Forefathers would turn in their graves if they saw how out of control things are today. Shame on the US Govt.