Key takeaways
- For anyone with a full retirement age of 67, claiming at 62 pays 70% of your full benefit — a 30% cut that lasts for life and carries into a survivor's benefit.
- In the worked example below, a $2,400 monthly full benefit becomes $1,680 at 62, $2,400 at 67, or $2,976 at 70.
- Retiring at 62 and claiming at 62 are separate decisions. Retiring at 62 while delaying the claim costs roughly the same total portfolio but buys a much larger inflation-indexed floor.
- Medicare does not start until 65, so a 62-year-old retiree needs three years of self-funded health coverage.
- If you keep working before full retirement age, the earnings test withholds benefits — but they are credited back later, so it is a deferral, not a loss.
What claiming at 62 actually pays
Social Security quotes your primary insurance amount (PIA) — what you would get at full retirement age, which is 67 for anyone born in 1960 or later. Claim earlier and the benefit is reduced permanently; claim later and it grows by roughly 8% a year until 70.
| Claiming age | % of full benefit | Monthly | Per year |
|---|---|---|---|
| 62 | 70% | $1,680 | $20,160 |
| 63 | 75% | $1,800 | $21,600 |
| 64 | 80% | $1,920 | $23,040 |
| 65 | 86.7% | $2,080 | $24,960 |
| 67 (full) | 100% | $2,400 | $28,800 |
| 70 | 124% | $2,976 | $35,712 |
The reduction is not arbitrary. Benefits fall by 5/9 of 1% for each of the first 36 months you claim early and 5/12 of 1% for each month beyond that. Five years early is 36 months × 5/9% = 20%, plus 24 months × 5/12% = 10% — a 30% cut, which is where the 70% figure comes from.
The portfolio the rest requires
Suppose you want to spend $60,000 a year and your full benefit is the $2,400 a month above. Claim at 62 and Social Security covers $20,160, leaving a gap of $39,840 for the portfolio. A retirement beginning at 62 is a long one — plan for 33 years — so use a withdrawal rate near 3.75% rather than 4%:
$39,840 ÷ 0.0375 = $1,062,400.
That is the headline number for this household: a little over a million dollars, on top of claiming early.
The better question: retire at 62, claim at 67
Retiring and claiming are different decisions, and separating them is the single highest-value move available to a 62-year-old. Suppose you still stop working at 62 but leave Social Security alone until 67:
| Approach | Portfolio needed | Lifetime indexed income |
|---|---|---|
| Claim at 62 | $1,062,400 | $20,160/yr |
| Bridge to 67, then claim | ≈ $1,100,000 | $28,800/yr |
The bridge version is built from two pieces: five years × $60,000 = $300,000 to live on until the benefit starts, plus ($60,000 − $28,800) ÷ 0.039 ≈ $800,000 to cover the permanent gap afterwards. Total: about $1.1 million — barely more than claiming at 62, for an inflation-indexed income that is $8,640 a year higher, for life, and that carries over to a surviving spouse. You are effectively buying an annuity from Social Security with $300,000 of portfolio, at terms no insurer will match.
That trade is not automatic — it depends on health, longevity in your family, whether you are the higher or lower earner in a couple, and whether spending down the portfolio early makes you uncomfortable. Our guide on when to take Social Security works through the break-even arithmetic, and the break-even calculator puts your own numbers into it.
The three-year Medicare gap
Medicare eligibility begins at 65. Retire at 62 and you have three years to cover yourself: COBRA (time-limited), the ACA marketplace, a spouse's employer plan, or part-time work with benefits. Marketplace subsidies are based on modified adjusted gross income, which creates a genuine tension — the same low-income years that make Roth conversions cheap can also be the years you most want to keep income down for coverage. Whichever way you resolve it, price your coverage for your actual county and household and put the number in your spending before you multiply.
If you keep working: the earnings test
Claiming at 62 while still earning a salary runs into the retirement earnings test. Before full retirement age, Social Security withholds $1 of benefit for every $2 you earn above an annual limit (the limit is indexed each year, and a more generous rule applies in the year you reach full retirement age). The part people get wrong: the withheld money is not confiscated. At full retirement age your benefit is recomputed upward to account for the months withheld. It is a deferral, not a penalty — though it does make claiming at 62 while working close to pointless.
Do not forget the tax on the benefit
Social Security is taxed on a formula of its own. Add your other income plus half your benefit to get provisional income; above $25,000 (single) or $32,000 (married filing jointly) up to half the benefit becomes taxable, and above $34,000 / $44,000 up to 85% does. Those thresholds are written into the statute and are not indexed to inflation, so more retirees cross them every year. Our guide on how Social Security is taxed works through the calculation, and which accounts to spend first covers how withdrawal order changes the answer.
A short readiness checklist for 62
- Get your real benefit estimate from ssa.gov — not a guess, and not the maximum.
- Write down annual spending including a priced-out health insurance line for ages 62–65.
- Subtract the benefit you would actually claim, divide the gap by 0.0375, and compare to your invested assets.
- Run the same plan with the claim delayed to 67 or 70 and compare the lifetime floor.
- Check where the money lives: enough outside pre-tax accounts to fund the bridge without a tax spike.
The Social Security claiming age calculator and the retirement drawdown calculator cover the first and last of those in a couple of minutes each.
Frequently asked questions
How much does claiming Social Security at 62 reduce my benefit?
If your full retirement age is 67, claiming at 62 pays 70% of your full benefit — a 30% reduction. It comes from 5/9 of 1% per month for the first 36 early months plus 5/12 of 1% per month for the next 24, and the reduction is permanent apart from annual cost-of-living increases.
How much money do I need to retire at 62?
Take your annual spending, subtract the Social Security you will actually claim, and divide the gap by about 3.75% for a 33-year retirement. In the worked example — $60,000 of spending and a $20,160 benefit at 62 — that is roughly $1.06 million.
Should I retire at 62 but wait to claim Social Security?
Often yes. Funding five years of spending from the portfolio costs roughly the same total as claiming early, but raises the inflation-indexed benefit from 70% to 100% of your full amount for life, and raises what a surviving spouse receives. Health and family longevity are the main reasons not to.
What do I do about health insurance between 62 and 65?
The usual routes are COBRA from your former employer, an ACA marketplace plan, coverage under a spouse's employer plan, or part-time work that carries benefits. Marketplace subsidies depend on modified adjusted gross income, so the choice interacts with how much you withdraw or convert in those years.
Can I work while collecting Social Security at 62?
You can, but before full retirement age the earnings test withholds $1 of benefit for every $2 of earnings above an indexed annual limit. The withheld amount is credited back through a higher benefit once you reach full retirement age, so it is a deferral rather than a permanent loss.
See whether 62 works for you
Planomy models retiring at one age and claiming at another, with taxes, the health-coverage gap and required distributions included — so you can compare the two paths on the same screen instead of on the back of an envelope. Free, private, and running in your browser.