The Elder Law Forum

The Elder Law Forum
Age 62 Social Security: Do Your Math

"For Social Security purposes, should I take early, age 62, retirement?" is a question frequently presented to the helpline. According to one helpline caller it depends on whether you believe: (1) The "experts," or (2) The "math."

It also depends upon whether you are married. Women live longer than men. Frequently men who "hang it up early" predecease their wife, leaving her with a reduced benefit for the rest of her life. Advocates argue that men should not be permitted to take early benefits without their spouse's written consent. And, most importantly, it depends on how long you expect to live.


The retired and unmarried Arizonian who called said he has done the math. "It's not even close," he asserted. "Why do all those financial planners and experts keep advising retirees to pass up early retirement and wait for full retirement? They haven't done the math. It's quite simple if you calculate the time value of money."

The time value of money is based upon the simple understanding that a dollar received today is worth, at six percent interest, $1.06, compared to receiving that same dollar a year later. Add up all those six cents, multiply them by 18,000 (e.g., $18,000 Social Security annual payments), and compound each month to age 85. The income stream is compelling.

"It takes 32 years for the person who waits to full retirement age to catch up with the person who started receiving benefits at age 62," he said. For most people born before 1960 the catch-up time is generally estimated to be between 14 and 17 years.

His calculation was based upon his own situation: Should he take a $1,400 monthly benefit at 62, or wait four years and receive his normal retirement benefit of $1,800? By opting for the reduced benefit now, he will accumulate nearly $74,000 by his 66th birthday, assuming constant dollars at 6 percent compound interest.

The caller's "math" is predicated upon his assumed life span. Today the average longevity for men is 74.8 years and for women, 83.4 years. But upon reaching 65, both sexes can expect to live to age 83.4. Since the caller is not employed and receives no earned income, he is not concerned about the possible forfeiture of $1 for every $2 earned above $13,100.

The caller retired from teaching eight years ago at age 54. "People do not fully appreciate the power of compounding interest when you start saving at a young age. My mother taught me that lesson when I was in high school," he said. He followed her advice. He does his own math. So should you.

Pro bono legal information and advice is available to persons 55 and older through the USD Senior Legal Helpline, 1-800-747-1895; or mmyers@usd.edu. Opinions solely the author's and not those of The University of South Dakota.

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