And even though SSDI taps into your Social Security benefits, you get paid less overall each month with early retirement. That’s because you lose money taking Social Security early retirement. If health problems force you to stop working at 62, SSDI is a much better option than early retirement. Why Is It Better to Apply for SSDI Than Early Retirement at 62? Paying less money into your Social Security fund means you have less money to pull out once you retire. Look at it this way: When you take early retirement at 62, you stop paying FICA taxes 4-5 years early. But on a month-to-month basis, the payment amount you’ll get is a lot less. As a general rule, you’ll get about the same amount in Social Security benefits totaled up over your lifetime.
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(For most people reading this, your full retirement age for drawing Social Security retirement checks is 67.) Taking early retirement at 62 reduces your benefit anywhere from 30%-35% so the SSA can cover those additional months. In fact, the SSA may reduce your Social Security checks by 30% or more for life to cover those early retirement payments.Įssentially, here’s how that works: the SSA reduces your payment for every month between your current and full retirement age. But if you decide to take early retirement at 62, you’ll receive less than your full Social Security benefit amount. And technically, you can start drawing early retirement benefits right after your 62nd birthday.
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This also covers SSDI benefits as well as Medicare health coverage. Paying FICA taxes over time will make you eligible for Social Security retirement benefits once you’re old enough. (The current Medicare tax rate is 1.45%.)
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Employers often lump Medicare taxes into these withholdings, too. Known as the Federal Insurance Contributions Act (FICA) tax, these payroll deductions equal a percentage of your current wages. The current tax rate is 6.2% for both employers and employees, or 12.4% total. Most people pay into the Social Security retirement system for their entire career.