Social Security - Age 62 or 65

Cost Benefit Analysis

Drawing Social Security at Age 62 or Age 66

Cost Benefit Analysis of

Drawing Social Security at age 62 or age 66

A considerable portion of the American population is approaching eligibility for Social Security benefits. Many in this aging demographic have been negatively affected by the economic recession. Since Social Security may be the major source of income for the rest of these seniors’ lives, the decision on when to start receiving benefits is a very important one. There are two options to select from.

1. Option One involves both the ‘Benefits’ and ‘Costs’ of drawing Social Security at age 62, but at a 25% reduced rate.

2. Option Two involves both the ‘Benefits’ and ‘Costs’ of waiting until age 66 to draw Social Security; thereby receiving the full retirement amount (Biggs, 2009).

This paper will consider a long-term unemployed male approaching age 62 with living expenses of $1,000 per month. He would qualify for a full retirement benefit of $1,000 per month at age 66, and is expected to live until age 74.8 (Schoen, 2013). He also has $50,000 in a money market account and no outstanding debt. Inflation and Social Security cost-of-living increases are being ignored to facilitate this comparison.

‘Benefits’ of Accepting Social Security at age 62

One benefit of accepting Social Security at age 62 would be to receive 75% of the full retirement benefit immediately upon turning 62 (Lemons, 2013). This $750 payment 75% of the full retirement benefit would be $750 monthly. This payment rate will be permanent

A second benefit would be the interest earned on savings account beginning at age 62. Interest rates on money market funds are expected to remain at low levels, with 0.90 being a common return-on-investment ("Ally bank money," 2013).

Measurable benefits are displayed below:

|Benefits (Income) if drawing Social Security at 62...