Deciding when to start collecting Social Security benefits is one of the most consequential financial decisions you will make in retirement. The difference between claiming at 62 and waiting until 70 can mean tens or even hundreds of thousands of dollars over a lifetime. There is no universally right answer—the best choice depends on your health, financial situation, other retirement income, and how long you expect to live.

This guide breaks down the key factors to help you make an informed decision.

How Claiming Age Affects Your Benefit

Social Security benefits are calculated based on your full retirement age (FRA), which is 67 for anyone born in 1960 or later. Your FRA benefit is the baseline—claiming earlier reduces it permanently, and claiming later increases it permanently.

For 2025, the maximum Social Security benefits by claiming age are approximately $2,831 per month at age 62, $4,018 per month at full retirement age (67), and $5,108 per month at age 70. Most workers will not reach these maximums, which require 35 years of earnings at or above the taxable wage cap, but the proportional relationships between ages hold regardless of your benefit amount.

If you claim at 62, your benefit is reduced by approximately 30 percent compared to your FRA amount. If you wait until 70, your benefit increases by 24 percent above your FRA amount through delayed retirement credits of 8 percent per year. Comparing the two extremes, claiming at 70 provides roughly 77 percent more per month than claiming at 62.

The Case for Claiming at 62

Claiming early makes sense in several situations, and it is not always the wrong decision despite the permanent reduction in monthly benefits.

If you need the income to cover essential living expenses and have no other sources of retirement income, claiming at 62 provides immediate cash flow. Waiting three or five more years is not realistic if you cannot pay your bills. If you have health concerns or a family history that suggests a shorter life expectancy, collecting earlier means you receive benefits for more years. The break-even point—where total lifetime benefits from waiting exceed total lifetime benefits from claiming early—typically falls around age 78 to 80 depending on your specific numbers. If you do not expect to live past that age, claiming early may result in more total benefits received.

There is also an investment argument: if you claim at 62, by the time you reach 70 you will have collected approximately eight additional years of payments. For someone with a $2,000 monthly benefit at 62, that is roughly $192,000 received before age 70. If you could invest those payments and earn strong returns, the accumulated portfolio might offset the lower monthly amount.

Finally, claiming at 62 may make sense if you want to transition to part-time work or retirement and need supplemental income to bridge the gap.

The Case for Waiting Until 70

For people in good health with other income to support them through their 60s, waiting until 70 is often the financially optimal choice.

The 8 percent annual increase in delayed retirement credits is effectively a guaranteed, inflation-adjusted return—one of the best risk-free returns available anywhere. No other investment offers a guaranteed 8 percent annual increase with cost-of-living adjustments built in.

Waiting also maximizes survivor benefits. If you are the higher-earning spouse and you pass away first, your surviving spouse receives your full benefit amount. A larger benefit at 70 means a larger survivor benefit for your partner’s remaining years.

If you expect to live into your mid-80s or beyond, the higher monthly payments from waiting will significantly exceed the total amount you would have received by claiming early. For someone with an FRA benefit of $2,500 per month, the difference between claiming at 62 ($1,750) and 70 ($3,100) is $1,350 per month—$16,200 per year—for every year after 70.

The Middle Ground: Claiming at Full Retirement Age

Claiming at your full retirement age of 67 provides your full calculated benefit with no reduction and no delayed credits. This is a reasonable middle ground for people who want to start benefits without the steep reduction of early claiming but who also do not want to wait until 70.

One advantage of claiming at FRA rather than earlier is that the Social Security earnings test no longer applies. If you claim before FRA while still working, your benefits are temporarily reduced if your earnings exceed the annual exempt amount (approximately $23,400 in 2025). After FRA, you can earn any amount without your benefits being reduced.

How Working Affects Early Benefits

If you claim Social Security before your full retirement age and continue working, the earnings test can temporarily reduce your benefits. In 2025, if your earnings exceed roughly $23,400, Social Security withholds $1 in benefits for every $2 you earn above that threshold. In the year you reach FRA, the threshold is higher and the reduction rate is lower.

Importantly, these withheld benefits are not lost permanently. When you reach full retirement age, Social Security recalculates your monthly benefit to credit you for the months in which benefits were withheld. However, during the years of withholding, your actual monthly income from Social Security may be significantly less than you expected.

Tax Implications of Social Security Benefits

Social Security benefits may be subject to federal income tax depending on your combined income—which includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits. If your combined income exceeds $25,000 as an individual or $32,000 as a married couple filing jointly, up to 50 percent of your benefits may be taxable. Above $34,000 (individual) or $44,000 (joint), up to 85 percent may be taxable.

This is particularly relevant for business owners who continue generating income from their business in retirement. Your tax preparer can model different scenarios to show how your claiming age and business income interact to affect your total tax liability.

Spousal and Survivor Benefits

If you are married, your claiming decision affects your spouse as well. A spouse who did not work or who earned significantly less can receive a spousal benefit equal to up to 50 percent of the higher-earning spouse’s FRA benefit. Spousal benefits are available starting at age 62 but are reduced if claimed before the spouse’s own FRA.

Survivor benefits are based on the deceased spouse’s actual benefit at the time of death. If the higher earner waited until 70 and was receiving the maximum delayed benefit, the surviving spouse receives that larger amount for the rest of their life. This makes delaying benefits particularly valuable for the higher-earning spouse in a couple.

Making Your Decision

There is no one-size-fits-all answer. Consider your health and family longevity, whether you have other retirement income such as pensions, 401(k), or IRA savings, whether you plan to continue working past 62, your spouse’s benefits and financial needs, and your current debt obligations and living expenses.

A financial advisor can run detailed projections based on your specific situation. Your bookkeeper plays an important supporting role by ensuring your business financial records accurately reflect your income, which directly affects retirement contribution calculations, estimated tax payments, and the financial data your advisor needs to model scenarios.

At Maxim Liberty, we help business owners maintain the accurate financial records that form the foundation of sound retirement planning. Contact us to learn how our bookkeeping services can support your long-term financial goals.

Frequently Asked Questions

When should I start collecting Social Security?

The decision depends on your health, financial needs, and other retirement income. Collecting at 62 gives smaller monthly payments for more years. Waiting until 67 (full retirement age) or 70 maximizes monthly benefits. Each year you delay past full retirement age increases benefits by about 8 percent.

How much more do I get by waiting to collect Social Security?

Benefits increase approximately 8 percent for each year you delay past full retirement age, up to age 70. Someone eligible for $2,500 per month at 67 could receive about $3,100 per month by waiting until 70—a 24 percent increase for life.

What factors should influence my Social Security timing?

Consider your health and life expectancy, other retirement savings, spousal benefits, whether you plan to continue working, current financial needs, and tax implications. A financial advisor can model scenarios specific to your situation.

How does working affect Social Security benefits?

If you collect before full retirement age while working, benefits are reduced if earnings exceed the annual limit, roughly $23,400 in 2025. After full retirement age, there is no earnings reduction. Withheld benefits are recalculated and added back later.

Can my bookkeeper help with retirement planning?

While bookkeepers do not provide financial planning advice, we ensure your business financial records are accurate so you and your financial advisor have reliable data for retirement planning decisions. Accurate profit tracking directly impacts retirement contribution calculations.