Many seniors spend months or years trying to figure out when to file for Social Security. You’re allowed to sign up for benefits beginning at age 62. However, you’re not entitled to your full monthly benefit (which is calculated based on your earnings history) until you reach full retirement age, or FRA. For anyone born in 1960 or later, FRA won’t kick in until age 67.
There’s also the option to delay your filing past FRA. For each year you do, your benefits will grow 8%, up until you turn 70. At that point, you can’t boost your benefits anymore, so there’s no sense in not signing up.
Clearly, there are pros and cons to claiming Social Security at different ages. If you file at 62, you’ll get your money sooner, but you’ll also be left with a reduced benefit for life. If you file at the age of 70, your monthly benefit will be higher on a permanent basis, but you may have to work longer and delay your retirement to make that happen.
The filing age you choose should ultimately hinge on your financial needs and goals. That said, you may want to plan on claiming benefits at 62 for one big reason — you may not have a choice.
When life throws you a curveball
Some people set a goal of retiring early and work hard to make it happen. But for many people, early retirement isn’t so much a choice as a necessity.
In fact, a 2020 survey by the Employee Benefit Research Institute found that 48% of workers actually end up having to retire sooner than planned. For some, early retirement could stem from health issues. Or it could come as the result of being downsized out of a job and not being able to find another one.
But either way, you may want to plan on having to sign up for Social Security at 62, even if that’s not your optimal filing age. And you may want to plan on having your benefits take a hit, since that’s what happens when you file as early as possible.
If you operate under the assumption that you’ll be claiming Social Security at age 62 and will therefore be in line for a lower monthly benefit, that alone might prompt you to ramp up your savings while you’re still working. Then, if you’re not forced to end your career early and you don’t have to take benefits at 62, you can always hold off on filing for Social Security to score a higher payday. In that situation, the worst thing that happens is that you have more money sitting in your IRA or 401(k) plan to enjoy during your senior years.
Another thing to consider is that, even if your job is steady later in life and your own health is great, you may have to scale back on work or stop altogether to become a caregiver for a loved one. And so in that case, claiming Social Security at 62 may become necessary, too.
It helps to plan for the worst
You may not love the idea of planning to have your career end abruptly. But the reality is that it happens pretty often. So assuming you’ll have to file for Social Security at 62 isn’t necessarily being negative. If anything, it’s being smart.
If you plan for the worst and save accordingly, you could end up in a very strong financial position once retirement rolls around. And who knows? If you save enough, you may decide to claim Social Security at 62, not because you have to — but because you want to.
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