One of the nice things about Social Security is that you get a choice as to when to take benefits. Once you turn 62, you can pretty much sign up at any age.
But there’s a reason Social Security recipients are often advised not to sign up for benefits at 62. You’re not entitled to your monthly benefit without a reduction until full retirement age arrives. That age is 67 if you were born in 1960 or later.
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Social Security also incentivizes recipients to delay their claims past full retirement age. For each year you do, until you turn 70, your benefits get a permanent 8% increase.
You may be inclined to think that claiming Social Security at 62 is a bad idea. But here’s why it really isn’t.
You might come out ahead financially
It’s true that claiming Social Security at 62 means slashing your benefits on a monthly basis. But that doesn’t necessarily mean you’ll get less income on a lifetime basis.
The general convention with Social Security is that if you live an average lifespan, you’ll break even regardless of when you file for benefits. An early claim will be compensated for via more monthly payments, while a delayed claim is offset by fewer monthly checks. All told, things are supposed to even out.
But if you don’t end up living a very long life, suddenly, an early Social Security claim pays off a lot more and a late claim pays off a lot less. So you may want to consider filing for benefits as early as possible to mitigate the risk of potentially getting stuck with less lifetime Social Security income.
An early filing could benefit you in more ways than one
There’s of course the chance of ending up with less lifetime income if you claim Social Security at 62. And since you can’t predict how long you’ll live, it’s hard to know how strong that risk is.
But it may be that claiming Social Security at 62 benefits you in other ways. And those are worth considering.
Imagine you’re stuck in a job that’s stressful and bad for your health, but you’re hesitant to tap your savings to live on. If filing for Social Security at 62 gets you out of that situation, that’s reason enough to claim benefits early, provided you don’t think it will compromise your ability to pay your bills in retirement.
Similarly, it may be that you have a chronic health issue that won’t necessarily shorten your lifespan, but may impact your mobility down the line. In that case, claiming Social Security at 62 could mean getting the chance to travel or enjoy certain experiences while you’re still able to.
It’s always a good idea to think through different Social Security filing scenarios. Not only that, but it’s important to run the numbers to see what monthly benefit you’re entitled to at different ages.
But don’t automatically assume that claiming Social Security at 62 is a poor choice. It could end up being a fantastic decision for you.
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