Should I begin collecting Social Security at age 62 when I retire or at age 67, which is my full retirement age?
I will stop working at age 62. I can survive financially for several years without Social Security. If I wait to FRA at age 67, I will have no earned income since age 62. Those years will count as zero when they calculate my SS benefit. I'm I better off collecting at 62 with no zero years in the averaging, or should I collect at 67?
Absolutely not, the 62 year benefit is based upon a reduction penalty of the normal retirement benefit at 67. You should wait to 67. In fact, if you are healthy I recommend waiting to age 70 because you receive a significant (25%) increase for live by waiting to 70.
If you are in good health then you should wait even longer until you are 70. The fact that you aren't working after age 62 is not going to cause your payments to be lowered or penalized in any way. You will come out far ahead by waiting until age 70 unless you die before you are 80 years old, and if you live until 90 you will come out very far ahead.
If you take social security before your full retirement age (FRA), you are penalized with a smaller benefit. If you stopped working at age 62, you do not need to concer yourself with the "Zeros" because your PIA (Primary Insurance Amount) is calculated based on your average indexed monthly earnings during the 35 years in which you earned the most. Also, if you wait past your full retirement age up unitl age 70, you will receive and additonal monthly benefit.
To calculate the optimal strategy for you depends on a number of factors including your health, whether there is longevity in your family, wether you are married. If is a trade off between receiveing a smaller benefit earlier or receiing a larger amount later. A financial planning professional can run scenarios with you using software in order to show you the pros and cons of waiting.
The easiest and most accurate way to know when to collect your SS income is to login to your SSA website to see the difference.
You stated correctly that if you do not work from 62 to 67, you would have five “zeros.” However, SSA income is based on the average of the highest 35 years of one’s earning records. Thus, if you have had a good earning history up to 62, I doubt five zeros would make much dent to your benefits.
On the other hand, if you take the benefits at 62, that’s a permanent reduction (25%) of your benefits for your lifetime. The only way to get back that loss is via simultaneous working. Then, you will run into the problem of an “earned income limit,” which SSA holds $1 for every $2 of your earned income above the threshold of $17,640 (2019) for people who are not at full retirement age and collect SSA while working.
So, be careful of what you intend to do. Best!
Your Social Security benefit is based on your 35 highest earning years. If you've worked less than 35 years, then zero will be included in the calculation. For each year of deferral from age 62 to age 70, there is approximately a 7 percent increase in benefits. If you visit your local Social Security Administration office, they can review your options.