Retiring at 64? Why It’s the Worst Time To Claim Social Security
Written by
Peter Burns
Edited by
Cory Dudak
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Whether it’s because of health issues or disabilities, an employer’s mandatory retirement policy or an inability to find a job, many people don’t get to retire on their own terms.
However, if you are lucky enough to choose the age you stop working, there is one age to avoid entirely: 64.
The Disadvantage of Retiring at 64
Social Security benefits are monthly payments made to those who have retired or can’t work due to disability]. Payment amounts, according to the Social Security Administration (SSA) website, depend on your earnings history and the age you start claiming them.
Today, the government considers 67 to be the full retirement age for people born in 1960 or later. You can begin receiving your Social Security payments from age 62, but the longer you wait, the more you will receive.
This is the percentage of the full amount you receive at age 67, based on when you start taking Social Security benefits:
- Age 62: 70%
- Age 63: 75%
- Age 64: 80%
- Age 65: 86.7%
- Age 66: 93.33%
- Age 67: 100%
- Age 68: 108%
- Age 69: 116%
- Age 70: 124%
Determining the best time to begin taking Social Security is difficult. You are essentially locking in the amount of money you’ll receive each month for the rest of your life. Taking it earlier means you’ll get less monthly pay over a longer period. Taking it later will mean larger checks for a shorter amount of time.
If you were forced to leave your job and need to start taking Social Security immediately, you don’t have much of a choice on when to begin receiving payments. However, if at all possible, it’s best not to start receiving Social Security at the age of 64.
At 64, you’re just three years away from receiving the full benefit, and settling means you’ll receive 20% less each month for the rest of your life. If your full check at 67 would equal $2,000, you would only receive $1,600 a month starting at age 64.
In this example, that person would make $19,200 per year in income. The person who began taking benefits at 67 would make $24,000 per year. The 64-year-old retiree would have more money for the first few years, receiving $57,600 before the 67-year-old even gets a cent. However, the 67-year-old retiree would begin receiving $4,800 more annually. After 12 years, or when they reach the age of 79, opting for the early benefits becomes a disadvantage. It becomes more disadvantageous the longer you live.
This same argument can be made comparing retirement at 62 vs. 64. However, retiring immediately can mean having more time to yourself with good health. Personal finance expert Dave Ramsey brought up another way that starting at 62 can be beneficial. He pointed out that you can invest the money you get at 62, and it will have more time to grow and compound.
Retiring at 64 feels like missing out on the full advantages of either side, making it the worst time to choose.
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