Sorry to Say: You Probably Shouldn’t Claim Social Security at 62

There’s a reason 62 has long been a popular age to sign up for Social Security: It’s the earliest age you can start collecting benefits.

You’re entitled to your full monthly Social Security benefit based on your personal income history once you reach full retirement age (FRA). That age is either 66, 67, or 66 and a certain number of months, depending on your year of birth.

Your FRA is an important thing to know, because without it, you won’t be able to figure out how much of a hit your monthly benefit will take if you claim Social Security at age 62. See, for each month you file ahead of FRA, that monthly benefit gets reduced on a permanent basis. And so if your FRA is 67 and you sign up for Social Security at 62, you’ll be looking at a 30% reduction, which is not a small amount.

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Now you may be willing to accept a smaller monthly benefit from Social Security if it means getting your money sooner. But here’s why you may not want to sign up as early as possible.

There are too many risks to bear

Signing up for Social Security at age 62 might seem appealing. But it can also be risky.

For one thing, you don’t know how well your nest egg is going to hold up throughout your retirement. And you could end up depleting your savings prematurely if market conditions cause your investments to underperform.

Just look at how the stock market has performed this year. Many savers are seeing lower balances in their IRAs or 401(k)s now than they were at the start of the year due to general volatility. That’s something a higher Social Security benefit can help protect against.

Living a longer life could also make it so you run out of savings sooner than expected. You might, for example, take withdrawals from your retirement savings under the assumption that you’ll live until your mid-80s. But if you end up living until your mid-90s, you might end up with a cash crunch on your hands.

And then there’s inflation — something many people are familiar with this year. You never know when inflation might drive your living costs upward, putting a strain on your savings and increasing your risk of depleting them sooner than expected.

That’s why claiming Social Security at 62 may not be the best idea. Sure, you’ll get your hands on your money at an earlier age. But you’ll also slash your monthly benefit for life. And you may end up needing a higher benefit later in life if your savings don’t end up lasting your entire retirement.

You can kick off retirement with $2 million in your IRA or 401(k), but that money isn’t guaranteed to last. Social Security, on the other hand, will pay you a monthly benefit for the rest of your life, even if you live until 110. So the higher a monthly benefit you’re able to lock in, the more long-term financial security you’ll give yourself.

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