You have a choice of when to claim Social Security, and 62 is the youngest age at which benefits become available. However, you'll most likely hear experts tell you not to start your checks at 62 because doing so can substantially reduce your benefits.
While it is true that getting checks at 62 means each payment will be a lot smaller, there are actually some surprising reasons why getting your benefits started ASAP could be the right move.
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1. The benefits formula is designed to ensure you get the same lifetime income
While there's a lot of attention paid to the benefits of a delayed claim, the main selling point of waiting is that you get a larger monthly check. The problem is that you must forgo many years of Social Security income in order for that to happen.
Sure, you increase your benefits by waiting until full retirement age instead of claiming at 62. And you increase them even more if you delay your claim until 70. But you give up as much as eight years of money you could have received in order to do that. You'll need to collect higher monthly payments for a long time just to break even.
This is by design. When Social Security was created, a system of early filing penalties and delayed retirement credits was put in place to try to equalize the lifetime benefits you get. The idea is that it doesn't really matter when you start getting payments. An early claim comes with more checks, but each is smaller, while a delayed claim comes with fewer checks, but each is bigger.
This system works well unless you outlive your life expectancy, so claiming at 62 doesn't really have any downside unless you live longer than actuaries projected you would. If there's likely no big financial benefit to delaying, why not just claim your payments early so you can start enjoying them ASAP -- and don't have to bank on living longer than planned just to end up with more lifetime benefits?
2. You could preserve your savings by claiming benefits ASAP
There's another big benefit to claiming Social Security at 62. You can retire without immediately drawing down your savings as much. See, if you want to stop working at 62, or need to because of health reasons, you'll need money to live on. If you try to put off your Social Security claim, you could wind up depleting your savings.
You don't want to try to live on Social Security alone, as benefits are only intended to replace about 40% of pre-retirement income. You might be better off starting payments at 62, so you can withdraw a smaller sum from savings and ensure your account lasts.
3. You could maximize household benefits by enabling a higher-earning spouse to delay
Finally, there's one more surprising reason you may want to claim Social Security at 62. Doing so can sometimes maximize your household benefits if you're married.
Say, for example, that your spouse made more money than you. If they are thinking about claiming their benefits in order to bring in money for your family to live on, you both might end up much better off if you claim your benefits at 62 instead, in order to enable them to delay.
That's because if they wait, they can increase the bigger benefit and bring in more money when they eventually do claim their payments. If they pass away first, the survivor benefits will also be bigger. And, if you've shrunk your own benefit but qualify for sposual benefits, then it doesn't really matter that you reduced your own checks, since you'll be able to switch to spousal benefits once they've filed for their own checks to begin.
You may not be thinking about these big advantages of claiming at 62, but you should be. They may just convince you that an early Social Security claim is your best move.
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