Investing

Taking Social Security at 62 Was a Terrible Idea, but Things Have Changed

Austin Smith

Published: February 6, 2025 9:27 am

24/7 Wall St. Key Points:

• If you have passive income sources like dividends, interest, or rental income, which do not count against earnings restrictions, then deferring Social Security benefits raises monthly payments may be beneficial even if taking it at 62.
• For some retirees, early claiming is a strategic decision driven by worries about Social Security’s predicted funding shortfall by 2035 and possible future eligibility changes like raising the minimum age.
• The breakeven point for postponing benefits might take years to achieve, hence people who claim early may get significant total payouts before full retirement age cancels the difference.
• Also: retiring early may be closer than you think. Click here to take a brief quiz and see if you’re ahead, or behind. (sponsor)

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Transcript:

[00:00:04] Doug McIntyre: A lot of people think that taking social security at 62 is a bad idea, you don’t get paid as much, you should wait. Now, recently, There are counter arguments about that. So what, why, you know what they are. So why don’t you walk us through some of them?

[00:00:23] Lee Jackson: Well, always the argument is if you can wait until 65 or 67, depending on when you were born, you’ll get a lot more dough.

[00:00:32] Lee Jackson: And I, I guess that’s a good argument. If you have the wherewithal to wait, or you’re still working and not going to take it early, but there there’s there’s a good reason to consider taking it early and it’s this is that there may be a point we’ve had this discussion where the social security administration is told by the government.

[00:00:56] Lee Jackson: We can’t pay all this stuff early. So you’re going to have to move that early withdrawal up to 63 or 64. So that’s one item number two if you have say Left your job, but you have a fair amount of passive income and remember passive income is stock dividends bonds interest from cds Money from real estate that you own that pays rent Any of that you can have as much of that as you want and there’s no penalty The only penalty when you take social security at 62 is that you’re limited on how much you can make it your job You’re limited to 23, 500 net.

[00:01:37] Lee Jackson: So if you look at everything and look at all of your, your income, if you can take it early, by the time you get to 65 or even 67, you’ve already taken in five years of income. And let’s say it’s only 2000 a month. Most people can do the numbers on that. You’re talking about 24, 25, 000 a year times five. So you’re 125, 000 ahead of the game.

[00:02:02] Lee Jackson: By the time you get to that, full retirement age and you know, it will take years At the extra level which could be as much as two thousand dollars It could be up around four thousand one. It could take years to recruit that. So for if you have the right circumstances on like I did when I was working earlier at 24 seven I took it but I had to kind of manage my income and and make that work around that 23 5 level which has gone up a little bit But if you can do that and cap your earnings that’s reported to the IRS on your tax form for some people it couldn’t work.

[00:02:40] Doug McIntyre: Well, I have only one thing to say about this. Social security is running outta money in 2035. And I’ll take, I’ll take my money if I believe that as early as I can.

[00:02:52] Lee Jackson: Absolutely. And again, I think that in the not too dis there are already edging up the age brackets about three months every year or so. And there’s a good chance that they’re gonna eliminate 62 and, and move it to 63 or 64. So if you’re thinking about it now, look at all your options and if you fit within that guide and you have plenty of passive income, which will not affect things. Go ahead and take it.