Many who turn 62 are eager to apply for Social Security benefits because it will pay for rest of your life. Many think that total lifetime benefits will be the same whether you start at age 62 or delay until 70. Not so fast. Consider some of the pitfalls of starting Social Security early and the benefits you get if you delay receiving Social Security. Whether you are married or single, delaying your Social Security benefits will help you more.
If you retire at age 62 or 65 and you have some savings in an IRA or other savings vehicle, consider tapping into those before you apply for Social Security benefits. Here’s why. Under the current interest environment, what you receive as interest on your IRA or any other savings is closer to zero percent after taking inflation into consideration. On the other hand, Social Security grows on average seven percent a year between 62 and 70 without even adding cost of living increases.
If you receive benefits at age 62, your benefits will be reduced by 25 percent compared to you receiving benefits at 66 or after. Each year you delay, you get additional 8 percent for each year until age 70.