Fewer Seniors Are Claiming Social Security at 62. Here’s Why That’s a Good Thing.

There’s a reason 62 has long been the most popular age to sign up for Social Security: It’s the earliest age seniors can file for it. Seniors are entitled to their full monthly benefit based on their respective wage histories once they reach full retirement age (FRA), which is either 66, 67, or somewhere in between, depending on their year of birth. But they are allowed to file up to five years ahead of FRA if they so choose.

That said, the percentage of seniors claiming benefits at 62 has been dropping through the years. And new data from the Center for Retirement Research at Boston College reveals that the decline might be more substantial than what the Social Security Administration (SSA) has let on.

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The SSA reports that 34% of women and 31% of men who claimed Social Security in 2019 were 62. But the aforementioned data shows a lower percentage of seniors claiming benefits at that age: just 25%. And that might be a positive development.

The danger of claiming Social Security at 62

Filing for benefits as early as possible means having that extra income on hand sooner. But there’s a financial penalty for claiming benefits ahead of FRA.

Social Security benefits are reduced by 6.67% per year for the first three years they’re claimed before FRA. Beyond that, they’re reduced by 5% per year. To simplify that math, someone with an FRA of 67 who claims Social Security at 62 winds up with a monthly benefit that’s 30% lower than what it would have been at FRA. And that reduction is permanent (though there’s an exception for those take advantage of a do-over option, which involves withdrawing their applications and repaying all of their benefits to the SSA within a year).

Meanwhile, many seniors enter retirement with inadequate savings. And many don’t have a pension or outside income source to fall back on. As such, a large number of retirees wind up quite reliant on Social Security, and so those who shrink their benefits by claiming them at 62 often wind up cash-strapped.

Of course, there are some situations where claiming Social Security at 62 makes sense, or is even a savvy move. But there’s a risk in not waiting until FRA to file for benefits, and seniors who sign up too early could leave themselves in a tighter financial position than necessary.

Incidentally, in 2019, the most popular age to claim Social Security second to 62 was 66, which was FRA for those born in 1953. A much lower percentage of seniors opted to delay their benefits beyond FRA, which can be done up until 70 in exchange for an 8% boost per year.

It’s too soon to know whether the percentage of seniors who claim Social Security at age 62 will continue to decline. But the fact that this number is dropping can be viewed as a positive sign given the dangers of slashing a major income stream for what could be a very lengthy retirement.

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