Should you immediately apply for Social Security when you reach the age of 62? This is a looming question for many Americans, and several factors must be considered before deciding.
Numerous questions surround when to start taking Social Security. The best time will differ from person to person based on their specific circumstances. You can start collecting Social Security benefits at 62 (or sooner if you are disabled), wait until your full retirement age (which depends on when you were born), or wait until you turn 70.
While there isn’t a right or wrong answer to this question, the longer you can afford to delay starting benefits, the greater the total benefits may be over your lifetime.
Understanding your Full Retirement Age
To become eligible to receive full Social Security benefits, you must wait until you are at your full retirement age (FRA). This number depends on your birthday and are the following ages: if you were born in 1957 or earlier, you are already at your full retirement age; if you were born in 1958, your full retirement age is 66 and 8 months; if you were born in 1959, your full retirement age is 66 and 10 months; and if you were born in 1960 or later, your full retirement age is 67.
Early vs Delayed Benefits
There are trade-offs when deciding when to begin taking your Social Security benefits. Taking benefits early, as soon as age 62, results in a permanently reduced monthly payment (estimated 30% compared to waiting until you are at your FRA), but allows you to receive benefits over a longer period.
In contrast, delaying benefits past your FRA (up to age 70) increases your monthly payments by about 8% each year you wait, providing significantly larger checks for life, albeit for a shorter time. Delaying benefits is generally more advantageous if you expect to live beyond the average life expectancy, while claiming early may make sense if you need the income sooner or have health concerns.
Employment and Income Status
Other considerations when applying for Social Security Benefits are your current employment status and income. Earning income while collecting Social Security reduces your benefit temporarily until you reach your Full Retirement Age.
If you are below your Full Retirement Age, there will be a $1 benefit reduction for every $2 earned above the annual limit ($23,400 in 2025). In the year you reach your Full Retirement Age, your benefit reduction will be $1 for every $3 earned above the higher limit ($62,160 in 2025). Once you reach your Full Retirement Age, your benefits are no longer reduced, no matter how much you earn.
Congressional Activity
While the future of Social Security is uncertain, its current trajectory is unsustainable, and recent laws and congressional activity have begun to address this concern.
The Department of Government Efficiency (DOGE), led by Elon Musk under the Trump Administration, has initiated staff and office cuts and is pushing for stricter ID verification for benefit claims.
The Social Security Administration has implemented these changes to its identity verification process for all new applications. Despite this recent activity, more substantive and comprehensive reforms will be necessary to eliminate waste and put the program on a sustainable path.
Summary
As a reminder, your decision is permanent, so please consult a financial advisor. Every person’s situation and circumstances are different, so understanding your options is important when making this decision.
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The material has been gathered from sources believed to be reliable, however Bedel Financial Consulting, Inc. cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This article is not intended to provide investment, tax or legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through Bedel Financial Consulting, Inc. Advisory services are only offered where Bedel Financial Consulting, Inc. and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place.
