Claiming Social Security at 62 Can Cut Benefits 30% Despite $15,000 Card Debt
Updated
Updated · Money · Oct 19
Claiming Social Security at 62 Can Cut Benefits 30% Despite $15,000 Card Debt
3 articles · Updated · Money · Oct 19
Summary
A 62-year-old with credit card debt should first weigh long-term benefit losses against interest costs before claiming Social Security early to pay balances down.
A $15,000 credit card balance at 22% APR costs about $3,300 a year in interest, but claiming Social Security at 62 can reduce monthly benefits by up to 30% versus full retirement age.
Social Security benefits generally cannot be garnished by credit card companies, though issuers can still sue, freeze bank accounts and damage a borrower’s credit score.
Alternatives include 0% balance transfers, nonprofit credit counseling, debt management plans and part-time work to attack debt without locking in lower lifetime benefits.
Claiming at 62 may still make sense for people with health limits, no wages or savings, or debt already in collections, making expert counseling a key next step.