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The $150,000 Social Security Mistake: Claim at 62 vs. 67
Claiming Social Security at 62 cuts lifetime income by roughly $150,000 for the average retiree. Here's how the math works and when early filing still makes sense.
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Claiming Social Security at 62 instead of 67 locks in a 30% monthly benefit cut. For the average retired worker receiving $2,084 a month, that is a $625 reduction. Over 20 years, the difference totals roughly $150,000, according to the Social Security Administration's benefit formula.
The cut is permanent. Cost-of-living adjustments are calculated as a percentage of the benefit, so starting with a smaller check means smaller dollar increases every year. The gap widens, not narrows.
Waiting until full retirement age – 67 for anyone born in 1960 or later – delivers the full benefit. The trade-off is giving up five years of payments. Someone who lives to 87 collects 20 years of the higher amount versus 25 years of the lower amount. The breakeven point, where total lifetime benefits equalize, typically falls between ages 78 and 80.
Early filing can still be the right call. Poor health, a short life expectancy, or a job loss in a person's early 60s can justify the cut. The same logic applies if taking benefits helps avoid high-interest debt. In those cases, the monthly reduction is the cost of liquidity.