You have plenty of choices when it comes to deciding when to claim Social Security. And some people will tell you that signing up at age 62 is the worst decision you could possibly make for your retirement.
Why? Filing for Social Security at 62 means accepting a reduced monthly benefit for life. That's because you're not entitled to your complete monthly benefit, based on your individual income history, until full retirement age (FRA) arrives. That age is 66, 67, or somewhere in the middle, depending on your year of birth.
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You don't even have to take benefits at full retirement age if you don't need the money right away. For each year you hold off beyond that point up until age 70, your monthly benefits will grow by 8%.
While claiming Social Security at 62 means getting paid less money each month in retirement, it's not automatically a poor choice. And under the right circumstances, it could actually be a great decision.
The best reason to take benefits as early as possible
You'll often hear that the best reason to claim Social Security at 62 is if your health is in bad shape and you therefore don't expect to live a very long life. That's good advice. While filing for Social Security at a later age might put a higher monthly benefit in your pocket, waiting too long could result in less lifetime income from the program. So if you have a reason to believe you might pass away fairly young, it pays to start getting your benefits as soon as you can.
While poor health is a good reason to claim Social Security at 62, perhaps an even better reason is that doing so will help you meet your retirement goals.
You definitely need to think about the financial implications of an early filing -- there's no question about that. But let's imagine you're in decent shape financially. You have some savings (maybe not a lot, but enough), your health is average, and you have a few key goals you're hoping to achieve as a retiree, like hiking every national park on U.S. soil or traveling to a corner of the globe you've never been to before.
It could take money -- and a large chunk of it -- to meet those goals. And you may be able to pull them off in your mid- or late-60s just as easily as you can at 62. But maybe not.
If you're in a position where your health is good enough to fulfill those goals at 62, you may want to claim Social Security then and use the money to bring your dreams to life. Chances are, you worked really hard for decades, so you deserve the opportunity to make a financial decision that benefits you in the here and now.
Remember, you can't predict if and when your health might take a turn for the worse. So if, come 62, you're in a good position to meet your lifelong goals but need extra money to pull them off, there's nothing wrong with turning to Social Security.
It's OK to settle for less money
Claiming Social Security at 62 may result in a smaller lifetime benefit if you wind up living until your late 80s or beyond. But as long as your monthly benefits provide enough income for you to live comfortably, that almost shouldn't matter.
There's something to be said for prioritizing your happiness and giving yourself the satisfaction of achieving goals. And if claiming Social Security at 62 is your ticket to doing so and you can afford the hit to your monthly benefits, then there's no reason not to move forward.
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