If you’re turning 62 in 2025, you’re about to reach a major financial milestone—becoming eligible for Social Security retirement benefits. However, while claiming benefits as soon as possible may be tempting, it’s essential to make informed decisions to maximize your retirement income. Your choices at this stage can impact your financial security for the rest of your life.
Before you file for Social Security, here are three crucial steps to take to ensure you get the most out of your benefits.
Step 1: Understand How Claiming Early Affects Your Benefits
One of the biggest decisions you’ll face at 62 is whether to start collecting Social Security or to wait for a higher payout. While you’re eligible to claim benefits at 62, doing so comes with a permanent reduction in your monthly payments.
How Much Will Your Benefits Be Reduced?
- If you claim at 62, your benefits will be reduced by 25-30% compared to what you would receive at full retirement age (FRA), which is 66 or 67, depending on your birth year.
- If you wait until your full retirement age (66-67), you will receive 100% of your benefits.
- If you delay claiming until 70, your benefits will increase by about 8% per year due to Delayed Retirement Credits.
When Should You Claim?
- Claiming at 62 may be beneficial if you need immediate income or have health concerns that may shorten your life expectancy.
- Waiting until full retirement age or later is a better option if you want to maximize your lifetime benefits and increase your monthly payments.
Step 2: Evaluate Your Overall Retirement Income
Before making a decision, it’s crucial to assess all your sources of retirement income. Social Security is just one piece of the puzzle, and relying solely on it may not provide enough financial security.
Consider These Income Sources:
- Personal Savings & Investments – Do you have enough in a 401(k), IRA, or other savings accounts?
- Pensions – If you have a pension, how much will it provide, and how does it affect your Social Security?
- Part-Time Work – Do you plan to work while receiving Social Security? Keep in mind that if you earn over a certain amount before reaching FRA, your benefits may be temporarily reduced.
Social Security Earnings Limit for 2025
- If you claim Social Security before full retirement age and continue working, your benefits may be reduced if you earn more than the earnings limit set by the Social Security Administration (SSA).
- In 2024, the limit was $22,320 per year ($1,860 per month). If you exceed this, $1 is deducted from your benefits for every $2 earned over the limit.
- Once you reach full retirement age, there is no earnings limit, and you can work without penalty.
Step 3: Check Your Social Security Statement and Plan Your Strategy
Before claiming benefits, it’s vital to review your Social Security statement to ensure accuracy and develop the best claiming strategy.
How to Check Your Social Security Statement
- Visit the SSA Website – Go to www.ssa.gov and log in to your my Social Security account.
- Verify Your Earnings Record – Ensure all your past wages are correctly recorded. If any years are missing or incorrect, you may receive lower benefits than you deserve.
- Estimate Your Benefits – Use the SSA’s online calculator to see your estimated benefits at 62, full retirement age, and 70.
Strategies to Maximize Your Benefits
- Married Couples: Spouses should coordinate their claiming strategies to maximize survivor benefits.
- Widows/Widowers: You may be eligible for survivor benefits from a deceased spouse, which could be higher than your own retirement benefits.
- Divorced Individuals: If you were married for at least 10 years, you may be able to claim benefits based on your ex-spouse’s record.
Conclusion
Turning 62 in 2025 is an exciting milestone, but rushing to claim Social Security without a strategy could cost you thousands of dollars over your lifetime. Before claiming, take these three crucial steps:
- Understand how early claiming affects your benefits and decide if you should wait.
- Evaluate your overall retirement income to ensure financial stability.
- Review your Social Security statement and develop a strategy to maximize your benefits.
By taking these steps, you can make an informed decision that best suits your long-term financial needs and retirement goals.
FAQs
1. What happens if I claim Social Security at 62?
If you claim Social Security at 62, your benefits will be permanently reduced by 25-30% compared to what you’d receive at your full retirement age (66-67).
2. Can I work while receiving Social Security at 62?
Yes, but if you earn over $22,320 (2024 limit), your benefits may be temporarily reduced. Once you reach full retirement age, there’s no penalty for working.
3. What is the best age to start collecting Social Security?
The best age depends on your financial situation, health, and other income sources. Waiting until full retirement age (66-67) or even 70 increases your monthly benefits.
4. How can I check my Social Security benefits?
You can check your estimated benefits by creating a my Social Security account at www.ssa.gov and reviewing your statement.
5. Can I change my mind after claiming Social Security at 62?
Yes, if you change your mind within 12 months of claiming, you can withdraw your application and repay all benefits received to restart at a later date with higher benefits.