The No. 1 Reason to Claim Social Security at Age 62

Your adult life is full of financial decisions you must make. These decisions can vary based on your life phase, but there seems to be no shortage of them. One of the more important decisions you'll make in the latter parts of your life is when to claim Social Security benefits, because that'll affect your finances throughout your retirement.

Your Social Security primary insurance amount ( PIA ) is the monthly amount you're eligible to receive once you hit your full retirement age ( FRA ). You can think of it as the starting point for your Social Security benefits. From there, Social Security will adjust your monthly benefit based on whether you claim before or after your FRA.

While the prospect of increased monthly benefits causes many people to delay claiming Social Security, I believe the No. 1 reason to claim Social Security at 62 is the extra time it gives you to enjoy your benefits.

How Social Security adjusts your monthly benefit based on when you claim

Full retirement ages are based on birth years, as shown in the chart below.

Image source: The Motley Fool.

If you decide to claim before your FRA, Social Security will reduce your monthly benefit by 5/9 of 1% each month, up to 36 months. Any additional month after 36 will further reduce your benefits by 5/12 of 1% each month.

Here's how much you can expect monthly benefits to be reduced based on your claiming age:

Data source: Social Security Administration. The chart assumes a full retirement age of 67.

The effects of delaying your benefits are more straightforward. Your benefits will increase by 2/3 of 1% each month until you turn 70 . This works out to 8% annually.

Use your break-even age to help make your decision

Your break-even age is when the total lifetime benefits received from claiming Social Security at one age equal those of another age. It can help put into perspective the differences between smaller benefits for a longer time or higher benefits for a shorter time.

Let's take the maximum benefits at ages 62, 67, and 70 to see it in action: $2,710, $3,911, and $4,873, respectively. Here's how your total lifetime benefits would match up at certain ages.

Data source: Social Security Administration. Chart by author.

In this case, the break-even age between claiming at 62 versus 67 is just past age 78. Any time before that, the lifetime benefits from claiming at 62 exceed the total from claiming at 67. The break-even age between claiming at 62 versus 70 is just past age 80.

Knowing the break-even ages, it's helpful to ask yourself if the many months of missed payments plus the time it takes to hit your break-even age are worth the wait. If you claim at 67, you'll have 60 months of missed benefits; if you delay until 70, you'll have 96. That's a lot of missed payments, regardless of the difference in monthly payouts.

Give yourself more time to enjoy your benefits

Even if you're not in a situation where Social Security will be a large part of your retirement income , having this extra income stream could enhance the quality of your retirement.

Most people would agree that you're more likely to be more active, healthier, and energetic the younger you are. Going on a vacation is much easier when you're 65 versus 75, and participating in any physical activity is much easier when you're on the younger end.

Of course, these are broad generalizations, and there are exceptions, but it emphasizes the larger point of giving yourself the most amount of time to enjoy the Social Security benefits that you paid into throughout your career. That's especially true if you don't need the increased monthly payment for your livelihood.

Even if your ideal retirement is sitting on the porch and people-watching all day, receiving your Social Security on the earlier end gives you more financial flexibility to use it however you see fit.

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