Here’s why you ought to seriously consider taking Social Security at 62. Even if the 'basic' math suggests otherwise

Core Insights - The article discusses the complexities of deciding when to claim Social Security benefits, emphasizing the importance of considering longevity risk and opportunity cost in retirement planning [3][4][6]. Summary by Sections Social Security Claiming Age - Individuals can start claiming Social Security benefits at age 62, with full retirement age (FRA) between 66 and 67, and can delay benefits until age 70 [5]. - Delaying benefits can increase monthly payments by up to 8% per year according to the Social Security Administration [4][5]. Breakeven Age Analysis - The breakeven age is the point at which cumulative benefits from delaying Social Security exceed those from claiming earlier. For someone eligible for $2,000 per month at FRA of 67, the breakeven age is around 78 years and eight months if claimed at 62 [1][8]. - If the individual waits until age 70, the breakeven age rises to approximately 80 years and five months [1]. Longevity and Risk - Estimating longevity is uncertain, with average life expectancy in the U.S. around 78.4 years, but individual outcomes can vary significantly [2]. - If an individual passes away before age 70, they may receive no benefits despite years of contributions [2][3]. Opportunity Cost Considerations - The analysis of delaying benefits often overlooks the time value of money and opportunity costs associated with accessing and investing earlier benefits [6][7]. - For example, if an individual retires at 62 but delays claiming until 67, they may need to withdraw from savings, forgoing potential investment returns [6][8]. Adjusted Breakeven Age - When factoring in opportunity cost, the breakeven age can extend significantly. For instance, with a 5% annual return on investments, the breakeven age could rise to approximately 88 years and eight months [8]. - If the expected return is 8% annually, the breakeven point may not be reached within a typical lifespan, suggesting that claiming benefits earlier while keeping retirement savings invested could yield better financial outcomes [9]. Financial Strategies - To mitigate opportunity costs, retirees may consider maintaining a significant emergency fund or utilizing a home equity line of credit (HELOC) to avoid early withdrawals from investments [10][12]. - A high-yield account can help grow emergency funds, offering competitive interest rates and easy access to cash [11]. Professional Financial Advice - Given the complexities and uncertainties in retirement planning, working with a qualified financial advisor can help individuals account for various factors such as inflation, healthcare costs, and spending needs [14][16]. - Companies like Vanguard offer personalized advisory services to assist in creating tailored retirement plans [15][16].