Key Points
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Age 62 is when Social Security retirement benefits first become available.
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Filing at 62 could lead to reduced payments for life.
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If you don’t have a lot of supplemental income, claiming at 62 could hurt you.
There’s a reason many seniors get excited about turning 62. Age 62 is the earliest age to claim retirement benefits from Social Security.
But before you gear up to file for benefits, it’s important to understand the role Social Security is meant to play in your retirement. It’s also crucial to recognize the financial impact of taking benefits as early as possible.
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What to expect out of Social Security
One big misconception about Social Security is that it’s meant to replace your pre-retirement income in full. If you earn an average paycheck, you can expect Social Security to take the place of roughly 40% of it. And that assumes you don’t shrink your benefits by filing early.
You’re eligible for your Social Security benefits in retirement without a reduction if you wait until your full retirement age to file. If you were born in 1960 or later, that age is 67.
If you file for Social Security ay 62 instead, you’ll reduce your benefits by about 30%. And that reduction will generally remain in effect for the rest of your life.
Not only might smaller monthly benefits make it harder to manage your expenses, but they also give you less inflation protection. Social Security benefits are eligible for a cost-of-living adjustment each year. But the smaller your monthly payments are to begin with, the less money each of those annual raises is apt to put in your pocket.
Be careful when filing for Social Security early
It’s not automatically a bad idea to claim Social Security at 62. If you’re unable to work or have another reason for needing the money right away, it could make sense to file at that point.
But you should know that if you don’t have a lot of income outside of Social Security, claiming benefits at 62 could mean struggling to pay your bills throughout retirement. So it pays to consider waiting if you don’t have savings, a pension, or something similar to fall back on.
Finally, do know that if you’re married and are the higher earner in your household, claiming Social Security at 62 could hurt your spouse financially. If your spouse outlives you, they’ll be entitled to survivor benefits from Social Security equal to the benefit you got to collect while you were alive. So if you shrink that benefit substantially by filing at 62, you’ll leave your life partner with that much less money as well.
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