# Stock investment

Millions of baby boomers are signing up for Social Security, and on average, retired workers were awarded \$1,406.58 per month in benefits in December 2016. The amount received in Social Security income, however, varies significantly depending on your work history and the age at which you enroll. Therefore, that monthly amount may not be the best reference point for you if you plan on retiring at age 62.

Read on to learn how much you can collect in Social Security benefits if you claim at 62 and what you can do to make the most of those payments.

Image source: Getty Images.

## First, some background numbers

The Social Security Administration has made 2.9 million new awards to retired workers over the past 12 months, including 210,323 awards to recipients in December 2016 alone.

Retired worker claiming benefits in December got awarded an average of \$1,406.58, which was up from \$1,341.77 in December 2015. Also, it could be helpful to know that across all 41.1 million currently retired workers, the average Social Security benefit today is \$1,360.13, as of December 2016.

For perspective, the following table shows the average monthly Social Security payment to all retired workers between 2006 and 2015.

Data source: Social Security Administration. Table by author.

## How much at age 62?

In December, the SSA paid an average of \$1,076.70 per month to people age 62. The amount you receive, however, could be much different than this, because Social Security calculates your benefit using a complex formula based on your personal work history.

To calculate your age 62 benefit, the SSA subjects your highest 35 years of inflation-adjusted income to as bend points, or multipliers, and then reduces your payment by a fixed percentage.

In 2017, your full retirement age benefit is the sum of 90% of inflation-adjusted income up to \$885, 32% of inflation-adjusted income up to \$5,336, and 15% of inflation- adjusted income above \$5,336.

That amount is then reduced by 5/9 of 1% per month for the first 36 months and 5/12 of 1% for each additional month that you claim prior to your full retirement age. The full retirement age for people retiring at age 62 this year is 66 years and two months, which is two months higher than the full retirement age in 2016.

Therefore, if you claim benefits at age 62 this year, the amount you’ll receive per month will be 25.83% lower than the amount you would otherwise receive if you wait to claim at your full retirement age.

Here’s a table that shows how much your Social Security is reduced when you claim at 62, depending on your birth year and assuming a \$1,000 full retirement age benefit for the primary beneficiary, or a \$500 benefit for a spouse.

Because the amount you’ll actually receive in Social Security benefits at age 62 will differ from your peers because of differences in income, the best way to determine your actual benefit at age 62 is to use this online calculator, or by creating an online user ID so that you can view your personal record on Social Security’s website.

## Making the most of claiming at 62

Social Security rewards those who wait to claim benefits until after their full retirement age with delayed retirement credits that increase their payments. However, most Americans still claim benefits before reaching full retirement age, so if you’re considering claiming early too, you’re in good company.

If do claim benefits at age 62, here are a couple of things to consider if you plan to continue working.

First, if you have more than 35 years of income in your Social Security calculation, continuing to work could increase your future benefits if it replaces a low income year in your work history.

Second, if you earn more than \$16,920 in income, then \$1 for every \$2 earned above that limit will be held back from your Social Security check until you reach your full retirement age. Any money that gets withheld because of this rule will eventually increase your Social Security income.

While working could expose some of your Social Security income to income taxes, working even part-time could allow you to use some of your Social Security income to create a bigger nest egg, particularly if you contribute to a Roth IRA.

Roth IRAs allow workers with earnings to contribute to them at any age, and in 2017, people over 50 can contribute \$6,500 (\$5,500 base amount, plus a \$1,000 catch-up contribution). Over time, a strategy that includes claiming early, working at least part-time, and contributing the maximum to a Roth IRA every year could increase the chances that you won’t outlive your retirement savings.

– Stock investment