It's easy to see why so many seniors are tempted to claim Social Security at age 62. That's the earliest age to sign up for benefits, and for many people, the logic is, “Well, I might as well get my money as soon as I can.”
But there's a downside to claiming Social Security at age 62. Doing so means locking in a lower monthly benefit for life.
It's one thing to resign yourself to a lower payday from Social Security throughout retirement if, say, you're sitting on a $3 million nest egg. In that scenario, your Social Security benefits will probably be your leisure money more than anything else. If you want that cash sooner, so be it.
It's when you don't have a lot of savings that claiming Social Security at age 62 becomes a more dangerous notion. But even in that case, it can sometimes pay to file for benefits very early. Here are a few scenarios where signing up for Social Security at 62 makes sense, even when you're low on savings.
1. You've lost your job
When someone loses a job at an older age, it can be difficult to find another one. That's just the unfortunate reality of the workforce.
Sure, there are laws in place designed to prevent age discrimination. Enforcing them, and proving they've been violated, is another story. So if you find yourself downsized out of a job at age 62, and you're not having any luck finding another, then it pays to file for Social Security rather than rack up debt to cover your living costs.
2. Your job is harmful to your health
COVID-19 hasn't gone away. If you have an underlying condition that makes you more likely to suffer a severe illness upon infection, and your company won't let you work from home (or your job is one that can't be done from home), then claiming Social Security at age 62 could be your ticket to escaping exposure to not just COVID-19, but other illnesses that could have extreme consequences for you.
Or maybe you don't have any specific medical condition. But maybe your job is so unbelievably stressful that you're convinced it's harming your health. That, too, is a reason to sign up for Social Security at 62 so you can quit.
3. You want to make a career change late in life
If you've worked in the same industry for decades, it can be tricky to just switch gears. But let's say you were an accountant for 40 years and have always wanted to see what it would be like to work in a bakery. Claiming Social Security at age 62 could give you an opportunity to find out.
Those monthly benefits could make it possible to swing a giant pay cut and still keep up with your bills. And who knows? If your new career is one you enjoy, you may decide to keep at it for a while — even throughout retirement.
Claiming Social Security at age 62 is definitely a risk. It will mean resigning yourself to a smaller income stream throughout your retirement instead of a larger one. But in spite of that, an early filing could end up being a wise decision, and one that serves you well.
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