Your Social Security claiming age will have a significant impact on your monthly benefit amount. Filing earlier could result in receiving hundreds of dollars less per month, so it's a decision to take seriously.
Unfortunately, though, there's no clear-cut answer as to when everyone should begin claiming. Some people are better off filing early, while others could seriously benefit from waiting a few years. The right choice for you will depend on your unique situation.
That said, it's simpler than you might think to choose a filing age. If you've been considering taking Social Security as early as possible at age 62, there are three clear signs that might be the best decision.
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1. You have a robust retirement fund
Retirement at any age is expensive, but retiring in your early 60s is even more challenging financially. With seniors living longer lifespans and costs continuing to rise, you could need well over $1 million to retire comfortably.
Even with Social Security, you'll likely need a robust retirement fund to make ends meet. The average retired worker collects just over $1,900 per month in benefits, as of July 2024, and claiming at 62 will reduce your payments by up to 30% compared to what you'd receive at your full retirement age .
Exactly how much you need in savings will depend on many factors, such as the cost of living in your area and your expected lifespan. But a very general rule of thumb is to multiply your annual costs by 25. So if you expect to withdraw, say, $40,000 per year from your retirement fund, you'd need roughly $1 million in total savings.
Again, that's only a rough estimate, and everyone's savings needs will differ . But the more robust your retirement fund, the less you'll need to rely on Social Security -- and the earlier you can begin claiming.
2. You've been forced into an early retirement
Unfortunately, not everyone has the luxury of choosing when to retire. While claiming early can be risky if you don't have plenty of savings, it can sometimes be the best move if you're forced into an earlier-than-expected retirement.
You don't necessarily have to begin taking benefits as soon as you retire, but it can help your savings last longer. If you were to retire at 62 but delay benefits until, say, age 65, you would collect larger checks each month. But you'd also need to rely entirely on your savings or other income sources for three years, which risks draining your retirement fund too quickly.
It's especially important to preserve your savings early in retirement, because the longer your money sits in your 401(k) or IRA , the more it will grow. If you're able to rely more heavily on Social Security, you can leave more of your savings untouched in your retirement account -- helping them last longer.
3. Your health has taken a turn for the worse
In theory, you should collect the same amount from Social Security in total regardless of what age you begin claiming. You'll either collect smaller checks (but more of them) or fewer, larger payments.
However, if you live a shorter-than-average lifespan, you may receive more in total by claiming early. Each payment will still be smaller, but your lifetime benefit may be more than if you were to delay Social Security. Also, filing early can give you more time to enjoy your money while you're younger and healthier.
While nobody can predict exactly how long they'll live, if your health has taken a turn for the worse or certain illnesses run in your family, claiming as early as possible could help you squeeze as much as possible out of Social Security.
Your claiming age is a highly personal decision, and there's no single correct time to file. But taking Social Security at 62 can be a smart choice for many people, and by weighing all of your options, you can make the best decision for your financial future.
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