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The 62/67 Social Security Strategy: Making the Most of Retirement Benefits
retirement planning is a crucial aspect of financial management for individuals approaching their golden years. Among the many considerations to make, one that often arises is when to start claiming Social Security benefits. While the decision ultimately depends on an individual’s unique circumstances, the 62/67 Social Security strategy has gained popularity for optimizing retirement benefits.
The 62/67 strategy refers to the choice between claiming Social Security benefits at age 62 or waiting until the full retirement age, which is typically 66 or 67, depending on the year of birth. By understanding the pros and cons of each option, individuals can make an informed decision that aligns with their goals and financial situation.
Claiming Social Security benefits at age 62 offers immediate financial relief but comes with a trade-off. The primary advantage is the ability to start receiving monthly checks earlier, which can be particularly appealing for those in need of retirement income. Additionally, individuals with life expectancy concerns, health issues, or lacking alternative sources of income may find it advantageous to start receiving benefits sooner rather than later.
However, opting for early benefits also means accepting a reduction in the monthly payout. For each year a person claims before reaching full retirement age, their benefits are permanently reduced. This reduction can be as much as 30%, depending on the individual’s specific circumstances. Consequently, individuals who choose to claim early may receive smaller monthly checks throughout their retirement.
On the other hand, waiting until the full retirement age has its own set of benefits. By delaying Social Security claims, retirees can potentially enjoy increased monthly benefits. For every year an individual postpones claiming past the full retirement age, their benefits rise by 8%. Delaying until age 70 can lead to a 32% bonus, which can significantly enhance retirement income in the long run.
Furthermore, a crucial advantage of the 62/67 strategy is the potential for maximizing spousal benefits. If one partner in a marriage reaches their full retirement age while the other one claims at age 62, the higher-earning spouse can choose to file a “restricted application” to receive only spousal benefits. This allows them to collect half of their partner’s full benefit while accruing delayed retirement credits on their own earnings, ultimately leading to a higher payout down the road.
Finally, it is essential to consider personal financial circumstances and long-term plans when deciding between the 62/67 strategy. Individuals with substantial retirement savings, pensions, or part-time employment may have more flexibility to delay Social Security benefits. Conversely, those with limited financial resources or unexpected healthcare expenses may find it necessary to claim earlier.
In conclusion, the 62/67 Social Security strategy offers individuals approaching retirement an opportunity to maximize their benefits by thoughtfully considering the implications of early or delayed claims. Weighing the advantages of immediate income versus long-term financial planning is crucial in making an informed decision. By understanding the complexities of Social Security and seeking professional guidance where necessary, individuals can optimize their retirement benefits and enjoy a more secure future.
You seem to have good info to share, but I find it difficult to stick with the video when the first two minutes are irrelevant crap. Maybe better planning and editing are needed.
If he dies before her won't her bump up to his pia be permanently reduced by her taking hers early???
Who are these people who are going to starve om less than 40K a year
I think I would just work a few more years part time. His wife's benefit will always be reduced from full even if he dies.
Pablo needs some coffee.
Thanks!
Some gnarly teeth there. And then there's Pawblo.
How do I hire you?
My wife and I never made over $90,000.00 combined annually. We retired debt free. How is it that all the examples you give need so much to live on?
Gosh Josh (Hey that rhymes) This is close to my situation except I don't need that much per year. Every time I watch these videos I am like "Why am I working" turning 65 no bills wife is 5 years younger than me. She actually made over a 100k a year but because of the stress changed jobs this year making way less. But everything is paid for and she has a 401k and pension from a state job and I have multiple IRA Accounts. Paid off our newly built house last year due to your videos. I am so glad I did too. My only other comment would be to let me preview your future videos so that everyone is happy lol. Great Job!
I want to collect SS at 62, but I don't want a tiny check. Suggestions?
Would it be a good idea for that couple to perform some Roth conversions during the years where they have zero taxable income (up to near the limit where they would having income tax due?
I would think that this would possibly lessen the taxes owed in later years when RMDs kick in and assist with lowering the overall effect of the widow's tax trap if one spouse dies earlier than expected in the shown scenario.
This is the same type of planning that I am doing right now as I wish to retire no later than age 62, but plan to hold off on filing for SS until age 70.
I'm 67 and recently retired. If I start collecting SS now, my monthly check will be $3,760. If I wait until 70 it will be $4,719. Collecting now would be foolish
Your dog is smiling for the camera.
I tried the " move to Philippines " deal in 2021 with my Philippine wife. Without detail we are back in USA. It's not perfect here, but its pretty damn good comparative.
Too many people over complicate retirement
This was a good presentation if it was all about academics but as sully would say let’s take a look at the human element
When this guy‘s wife has the family income go down by the amount of her Social Security and they don’t have much in the way of tax qualified money at that point in time how do you think she’s going to feel now that she’s 85 years old
Something to consider
Thanks for removing your hat!
Pablo chilled and living then dream. Smiling all the way. Go Pablo
Your videos are good info for people in their 40’s and 50’s but what I have always stressed is that these people need to get their kids talking and sitting down with you. That is how we make a difference. The better the young people do the better us older ones do too. Gary
After a two year sabbatical I have returned to the workforce. I'm past FRA, and I want to delay claiming SS until I hit the big seven-oh. We are living comfortably on $5K a month, when I take SS that will jump to over $6K., and if I keep working (it is fun!) we will be pulling in more than I did back before CV-19 took us out of the workforce. And now we have no mortgage. Everybody has a different situation, but for this couple and most others waiting to collect is the best strategy for living large in your 70's and 80's.
Thanks for all the great videos Josh. My wife and I have a slightly different 62 /67 strategy that I think works, but would like a second opinion. She is a cougar (4 years older than me). She worked some and then became a stay at home mom. Her SS benefit at FRA is estimated to be $1,149 / month. We plan on taking hers early however at age 62 which is estimated to be $809 / month. I'll wait to collect mine at FRA which is estimated to be $3600 / month. The SSA will then top off my wife's benefit with an Excess Spousal Benefit = (her max spousal benefit at my FRA – her own benefit at FRA). Her max spousal benefit would be half of mine $1,800 / month, so $1,800 – $1,149 = $651 as her excess spousal benefit added to her $809 would be $1,460 for her once I turn 67.
62…that's my final offer
Pablo the star of the show again! So cute!
If I make it I'm taking it at 62
Wife is almost exactly 3 years to the day younger than me but has her own SS record, although her current PIA is about 35-40% of mine. Current goal is retiring in 3-5 years since I turn 55 in 3 years but we may stretch longer depending on market etc. We will live off mostly 401k and cash, then a pension when I turn 60. The Mrs will file for SS at 62 and I wait until 67 or 70. All of course subject to change based on health, markets, etc but the good news is we have options and as long as I can keep my current job for the next 3 years we will be set and able to retire in our mid-50's. As a bonus, the current job is not bad and can be done remotely so may even be willing to work part-time to keep the cash flowing and ease into retirement life.
9:47 Pablo dozing off
Good stuff Josh
Still haven't decided. We can start tapping the IRAs at 59 1/2 but we have a substantial brokerage.
Probably both going take SS at 62 take from the brokerage to keep our Obama credits in tact until 65 Medicare. We start Obama care this March. $600 ish a month. That is substantially less than the Cobra we currently are flipping for. But well miss the PPO.
My wife has already filed this year. We just did it. She is 63, I plan to file in 3 years, and work the full year, while collecting SS. This will give us a nice lump sum to sock away, 36k in SS benefits at todays $. It will probably be a bit higher in 2026.
It just makes sense. This save 3 years off the clock. Retire while we are young enough to enjoy it.
Hey Josh I hear you say a lot how the wife will only get half the SS as her husband. What about the SS she earned herself if she had a good job?
No debt and needs 64000 for expenses? Where do they live? Monte Carlo? We're doing great on half that!
Not sure how you pay virtually no tax and how you get that extra 12,000 right off never heard of that as a personal exemption the only one I know of is the 24 or 25,000 if you’re married filing jointly, Nice to see this in a spreadsheet seems too good to be true.
Confused on the "personal exemption" discussion. My understanding personal exemptions were eliminated with the Trump tax plan. Why am I confused you have added to this couples tax plan.
There is no "right" strategy. It is a personal decision, based on the individual's situation. For some 62 makes sense, for others it will be 70, or some age in between.
For those in their 40s and younger, this SS strategy will likely be more like 64/69.
My 66 1/2 is coming up. Take it or defer decision. Still leaning toward deferring but found out gov disability wife had was changed to an annuity. If her SS is not discounted by the annuity, will look at filing at my FRA. If her SS is discounted by the annuity, will just defer to 70.
I like these examples best.
Too bad for a lot of us that they did away with "File and Suspend"…
My philosophy is to take SS as soon as possible but do not spend it until max retirement age. Your investments should easily make up the dfifference, and you have the lump sum of the early distributions. Our medicare expenses are minimal, we have had Medicare Advantage policies for 12 years plus. Premium is $0-.We have saved many times the cost of maximum out of pocket if it were to arise. Your milage may vary.
Love these case study videos!
For most people in late fifties or early sixties their 401k is not large enough to worry about taxes. As they will only being pulling $20,000 or more from their 401k as the balance is not that large. Taxes just are not that big an issue till you approach the million dollar 401k account. Roth is not always the answer.
Would you suggest some Roth conversions while they have zero taxable income in order to reduce/eliminate the widows tax trap?
Why not let the 401k grow and take ss early and let most of their assets to their heirs