Claiming Social Security at Age 62
Are you considering early – claiming social security at age 62?
Will there be Social Security Cuts in 2032?
The Math on Claiming at 62 vs 67 (And How to Stress-Test Your Plan)
This episode breaks down the math behind claiming Social Security at 62. This was published in September 2026, amid headlines warning the trust fund could be depleted around 2032. That may potentially trigger a 22% across-the-board benefit cut (payroll taxes covering about 78% of scheduled benefits).
Using a $3,000/month full retirement age (67) example, filing at 62 causes a permanent 30% reduction to $2,100, and a later 22% cut could drop it to $1,638. This would be versus $2,340 -if someone files at 67 and then faces a cut.
The video explains the five-year cash-flow head start of claiming early, the typical break-even age around 78, and why longevity favors delaying due to a higher income floor and larger COLAs. It also urges viewers to run a personal “retirement stress test,” and warns about the Social Security Earnings Test if filing early while still working.
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Americans Rush to Take Social Security Early
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Transcript for Claiming Social Security at Age 62
If you’re approaching retirement, there’s been a lot of news coverage lately about the long-term outlook for Social Security and what may be coming down the road in 2032.
Have you heard this story?
It goes something along the lines of, “Hey, Social Security is going to run out of money in 2032, and everyone will have to take a big cut in their benefits.”
As a result, we’re hearing from more and more folks who are wondering IF they should rip up the script, rip up their plan, and consider claiming Social Security at age 62.
You know, claiming early….. under the belief that it might shield them from potential cuts in the future.
Look, making a permanent decision based on news headlines can bring some risk into your financial plan.
So in this video, we want to accomplish a couple of things.
First, we’re going to set the emotion aside, and we’re just going to look strictly at the math behind claiming Social Security at age 62.
Second, I’ll show you how filing early, those early filing penalties, can interact with a potential Social Security trust fund cut and help you decide if claiming Social Security at age 62 is really for you.
And third, we’ll look at the actual cash flow math of filing for Social Security early ……..along with a simple way to stress-test your own retirement numbers and see IF your strategy is positioned to handle something like this.
If you’re new here, my name is Tom Mullooly. I own an investment advisory and financial planning firm here in Wall Township, New Jersey, and I work alongside my three sons, who are all CFPs just like me.
To understand the math with claiming Social Security at age 62, first we have to look at how Social Security is structured.
If you look at the math, if your full retirement age is 67 (which it is for most people today)…… and you choose instead to be claiming Social Security at age 62, your monthly benefit will have a permanent 30% reduction.
This is the way the system is working under current law.
Now, let’s look at some current headlines that are getting people a little squeamish.
Right now, Social Security Administration gets their money from two different sources.
They get money coming in from each pay period…… from people like me and you who might still be working, and have money coming out of our paychecks going into Social Security.
They also have a reserve fund, trust fund, from all the previous workers over the years who contributed into the plan.
The “Social Security Trustees Report” indicates that….. at some point, probably in the year 2032…..
the trust fund reserve is going to be depleted.
So if Congress doesn’t do something before then, the incoming payroll taxes are only going to cover about 78% of scheduled benefits.
That would mean a potential 22% across the board cut in benefits.
In super simple terms, when you get your Social Security check each month, know that 78% of that money came from people who are still working and putting money into the Social Security system.
22% of your check, your Social Security check, comes from the reserves.
It’s the reserves that are getting drained in the coming years.
But there’s a misconception that “claiming Social Security at age 62” will somehow protect your income from that potential 22% cut.
In reality, if an across-the-board reduction were to happen, the implication seems to be….. that it would apply to everyone across the board regardless of when they initially filed.
So yeah, if you thought you were smart and considered claiming Social Security at age 62, you get a permanent 30% reduction forever.
Plus, you may be looking at **another** 22% reduction.
Not cool.
Now let’s put some numbers behind this.
If your full benefit at normal retirement age 67, is say $3,000 a month…… filing at age 62 permanently drops your starting check by 30% or $2,100.
Then if a 22% trust fund reduction gets applied, and gets applied to the lower amount in 2032, your monthly check could drop to $1,638.
If you hung on until age 67, you were looking at $3,000 bucks a month.
Now you’re talking about $1,638 a month.
This number’s been cut almost in half.
On the flip side, if you were to wait until age 67, your starting baseline is the full amount, $3,000 per month.
Even with that same 22% haircut, your hypothetical monthly benefit would now be $2,340 a month.
This is where the conversation gets interesting.
An argument can be made that claiming Social Security at age 62 gives me a window of five years of income that someone who waits until their normal full retirement age, they miss out on.
Technically, that is correct.
“Claiming early” builds an immediate cash cushion.
It gives you as much as 60 months, five years, of payouts before any potential trust fund adjustments were to take place.
If you’re in a situation where you’re in a cash flow squeeze, this might be something to consider.
But you’ve got to know your numbers.
We say that all the time here at the office.
Because of this head start (if you claim Social Security at age 62), an early filer remains financially….. numerically….. ahead in total cumulative dollars, for a period of time.
In fact, an individual who delays until their full retirement age at age 67 typically needs to get to age 78, thereabout, just to break even on the total pool of money that’s been collected.
So on a strictly cash flow basis…… does the early filer have a point?
Absolutely.
If your retirement horizon is shorter….. say you’ve got a serious illness, or if you need immediate cash to make ends meet, it could make sense.
However, the risk starts to shift the longer that you live.
So if you have reason to believe that your retirement may span well into your 80s or possibly into your 90s….. the compounding effect of a higher monthly check that started at full retirement age…… along with larger cost of living adjustments…..
……that’s going to start to outweigh that initial five-year head start that someone had who claimed Social Security at age 62.
So it ultimately becomes a really important choice.
Cash flow now…… versus securing a higher income floor in the future?
They’re (Congress) going to have to do something.
And incidentally, this is not the first time that we’ve had to deal with something like this.
The trust fund was facing insolvency in the early ’80s.
In fact, it was 1983.
It was my first year getting started in the business.
And this problem with Social Security, we had to “fix Social Security!!!”
This was all the headlines.
It was all anybody ever read in 1983.
The system had a pretty similar funding gap at the time.
And so….. at the very last possible minute…..
Congress passed the Social Security Amendments of 1983.
They wound up doing two things that really saved the system.
The first thing that they did was they increased payroll taxes to the present levels.
And the second thing, more importantly, is they increased the full retirement age from 65 to 67.
It used to be that you would file for Social Security at age 65.
Hah, not anymore.
So but just adding those two years lengthened….. and you could say strengthened….. the Social Security system for another 40 years.
I have absolutely no doubt that Congress will take a look at this.
And, knowing what I know, Congress will very likely come up with some solution.
But just realize that they’re going to do it……… at the last possible moment.
As they like to say in Washington, “Never let a crisis go to waste.”
This is going to become a political hot potato!
Because someone wants to run around with a flag saying, “We saved Social Security!”
Don’t forget that.
Because your retirement decisions are permanent, the most practical step you can take right now is to move away from getting sucked in by the headlines.
That is just not going to help you whatsoever.
Focus entirely on YOUR specific, your personal numbers.
You need to evaluate whether your overall plan can absorb an ongoing change.
In other words, can you roll with the punches?
This is what we call a “retirement stress test.”
So first thing you need to do if you want to stress test your situation….. log into Social Security.
Check out your account.
And take a look at what your monthly benefit is going to be at full retirement age.
And then the next step would be to map out your personal retirement assets.
So, take a look at your 401k, take a look at your traditional IRAs.
Do you have Roth IRAs?
Do you get a pension?
What are the sources of income?
What are the levers that you have….. that you can pull on….. in retirement?
And then you need to take a hard look at your expenses.
This is where everyone drops the ball!!
Run a scenario where you model your income, assuming “worst case” scenario.
On paper, cut that Social Security benefit by 22%…. starting in the year 2032.
Take a look at what you have.
If you can manage without this drop in Social Security….. then you don’t have to worry about compromises or changing your standard of living.
These are the things that we really want to focus on.
So look, if your retirement math….. and your withdrawal strategies…… show that your lifestyle stays the same even under some reduced benefit world that we may be living in…… then you may find that there’s very little mathematical reason – or logical reason – to rush into a permanent decision about claiming Social Security at age 62 or claiming Social Security early.
Don’t do it because of news headlines.
Don’t do it because your friends are claiming Social Security at age 62.
It may not be worth it.
I encourage you to run these different scenarios…… or sit down with someone who’s qualified to do this for you……and review your specific situation.
These are exactly the kinds of topics that we cover with our clients every single week here at the office.
Just click the first link in the description, below the video.
That’s going to take you to a page on our website where you can book some time with us, talk to our team, and see if we can help you out.
Now, if you do decide that claiming Social Security at age 62 makes the most sense for your cash flow….. there is ANOTHER critical set of rules you need to look at.
It’s called the “Social Security Earnings Test.”
Don’t make too much money!
If you choose to file early…… but plan to continue working and generating income, the government can temporarily withhold benefits…… if you exceed certain income limits.
However, not all income gets counted the same!
To explore how the rules treat things like W-2 income versus distributions from a retirement plan, click this video next……
