NCPA - National Center for Policy Analysis

Making The Right Social Security Decisions As Retirement Nears

July 17, 2000

Some important changes are occurring in Social Security which will have an impact on seniors' decisions about when to start collecting payments.

Until this year, those retiring at age 62 saw their Social Security benefits reduced 20 percent below what they would have received starting at age 65. But a new schedule takes effect this year -- the result of congressional efforts to shore up Social Security financing.

  • Under the new plan, retiring at age 62 will cost an individual 20.83 percent -- which will climb in stages to 30 percent by 2022.
  • Those choosing to retire at 63 or 64 will take proportionally smaller reductions relative to those retiring at 65.
  • Under the same new policy, the retirement age is rising this year to 65 and two months -- and will keep climbing to age 67 by 2022.

Experts say that the decision as to whether to start collecting at 62 or 65 -- or even later -- depends, at least in part, on one's expectations of longevity. Payments increase the longer individuals delay collecting. Those nearing 62 who are healthy and active, and who have family histories of greater longevity, might want to delay applying for Social Security. Others, who have medical problems and whose ancestors failed to reach truly old ages, may want to take the money and run.

Source: Anne Tergesen, "When to Collect," Business Week, July 17, 2000.


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