I Started Collecting My Social Security Before Full Retirement Age
Financial planners often say you should wait until your full retirement age to start collecting Social Security. But is that always true?
I think a lot of people believe collecting Social Security early is a big mistake.
Like a large percentage of the population, we basically live month-to-month, and have done so our whole lives. In addition, our income has almost always been fluid, meaning we didn’t have a regular paycheck coming in for a set amount that we could count on.
So we probably have a different perspective about money than a lot of people do. We’ve always lived more in the ‘now,’ and have never had a financial plan. In fact, we’ve never made enough money to set aside much of anything for the future. We’re basically going into our retirement years with next to nothing – which might horrify some people.
When a lot of seniors are trying to decide whether or not to retire, their financial situation is a major factor in their decision. For us, it’s a little different. But there are a lot of reasons we are working toward retiring as soon as possible. And collecting our Social Security is key.
I started collecting Social Security early – but was it really a bad decision?
When I was debating taking my benefits early, almost everyone I talked to said it would be foolish. They said I would lose a great deal of money if I didn’t wait until full retirement age or beyond. I was advised to wait as long as possible – maybe even until I was seventy – so the monthly payments would go up as high as possible.
But maybe they weren’t doing the math the same way I was. Because what I discovered from many sources like this article from Rebel Retirement is that if I waited until full retirement age to claim my benefits I could actually lose money.
Let’s look at the math together, using some simple figures just as an example.
Say I was able to receive $1000 per month if I started collecting at age 62. I believe they say the increase would be about 25% if I waited until I was at full retirement age, which for me was something like 66.6 years. (Let’s just say 67 for simplicity’s sake.) That would make the payments $1250 per month if I waited.
But here’s what many people don’t consider. If I start collecting Social Security at age 62, I would receive $12,000 a year for five years, which equals $60,000. If I waited until I was 67 to start collecting, I would make an extra $250 per month. But it would take twenty years to recoup the $60,000 I didn’t collect by waiting.
The CDC says the average life expectancy for women today is 81. If I only lived that long, I’d never make up what I lost by waiting. For men, the life expectancy is 75.8 years. If they wait until full retirement they would be collecting their benefits for about nine years. And would leave a lot of money on the table when they passed!
That seems like a good enough reason to start claiming my benefits early. But there’s more to it than that.
Since Bob and I don’t have retirement savings, we need to work on creating some passive income for when we’re not able (or willing) to keep working. Taking my Social Security early enabled me to stop working my second job and focus on building those income sources. It was more helpful to me to have the income from Social Security now than have a little extra later.
There are also some other things you could do if you start collecting early that you might want to consider. For instance, you could use the extra money to pay off debt. That would allow you to be in a better position to start living off a fixed income when you fully retire. Or, you could invest the money (if you’re good at that sort of thing) and earn even more with it during those interim years.
“But wait, there are other problems with taking it early,” people said.
One of the negatives I heard was that you can’t keep working after you start collecting your Social Security or your benefits will be reduced. While that is technically true, it might not be the whole story. According to the Social Security website, in 2025 the limit for what you can earn is $23,400. If you are under full retirement age, they will deduct $1 for every $2 you make over that amount.
But here’s what I didn’t know initially. If that happens, when you do reach full retirement age the Social Security Administration “will recalculate your benefit amount to give you credit for the months we reduced or withheld benefits due to your excess earnings.” In other words, you get it back. Maybe not in one lump payment, but in an increase to your monthly payments. Which could be helpful at that point. And of course, after you do reach your full retirement age, you can earn as much as you want with no penalties.
For me, collecting my Social Security benefits early was kind of a no-brainer.
I’ve been receiving those monthly deposits into my account for a couple years now, and boy, do I love seeing that money come in! It has made a huge difference for me to be able to quit my part-time job and work on my writing and other projects. Not to mention having some extra free time and brain space, which has been a boost to my mental health.
I understand that for many people, my decision could be seen as short-sighted or even reckless. But the truth is, a lot of people might think we’re crazy about how we live in general. We operate this way: we take the opportunities God gives us to bring in income, and ultimately trust Him as our provider, not ourselves or the government. It’s worked for us pretty well so far 🙂