Your standard Social Security benefit is based on your working history over your 35 highest-earning years. To get the standard benefit amount, you need to retire at a specific age called your full retirement age (FRA). Depending on the year you were born, you’d need to retire between the ages of 66 and 67.
Many people, however, opt not to wait that long. In fact, one of the most popular ages to claim benefits is also the earliest year they become available. That happens when you turn 62. The downside of starting your checks at that age, though, is that your monthly check is reduced by early filing penalties. These kick in for each month you retire ahead of FRA. They add up to around a 6.7% annual reduction for each of the first three years and an additional 5% annual reduction if you’re claiming benefits more than three years early. You also miss out on delayed retirement credits that raise your benefit amount when you wait to claim between FRA up until age 70.
While early filing penalties can be painful, they’re sometimes worth incurring if there’s a good reason to retire at 62. And there are plenty of great reasons to start your benefits at this young age, including the three listed below.
1. You want to retire early and need Social Security to do it
Early retirement has some financial downsides, but it can be a great thing if you have the money to pull it off. When you leave work at a young age, chances are good you’ll still have your health and enough energy to really enjoy your life as a retiree. You’ll also have more time in retirement to do everything you’ve always dreamed of, whether that’s traveling or staying home crafting with your grandkids.
Retiring early requires lots of savings to sustain you throughout your life. But even aggressive savers often can’t withdraw enough to make it happen without income from Social Security. And if you really want to leave work early and need the extra money your benefits can provide, you may just decide it’s worth getting less money at a time when you enjoy spending it more.
2. Your early claim will maximize your family’s benefits
Married couples have a lot to consider when claiming their Social Security benefits because they’re getting benefits for two. In many cases, couples decide the spouse who had lower earnings should claim benefits early to provide essential income for the family, while the spouse who earned more should wait.
This enables the couple to maximize their combined household benefits. Since benefits are reduced (or increased) based on a percentage of the claimant’s standard benefit, it just makes sense to get that extra percentage on the benefit that’s higher to begin with.
There’s also another benefit to having the higher earner wait — survivor benefits get bigger. If the higher-earning spouse claims Social Security ahead of schedule and reduces his or her benefits, the amount of survivor benefits is based on that lower amount. Otherwise, they’re based on his or her benefits at the time of death or the amount they would have received at FRA if they pass away before then.
Widows and widowers often experience a big reduction in household income that affects their living standard. Maximizing survivor benefits can prevent that — and if the lower earner needs to claim early to do that, it could very well be a smart move.
3. You don’t want to count on outliving your lifespan
Waiting to claim Social Security so you can get larger checks benefits you if you live long enough that the higher checks make up for the missed income you didn’t get… and then some.
If you wait until 66 to claim benefits instead of 62, you have to make up for four years of money that could’ve been sent to you — and then live even longer to end up with more lifetime income.
Social Security imposes those early filing penalties and delayed retirement credits for a reason. They’re designed so you’ll get the same total lifetime benefits no matter when you file for them. Of course, Social Security doesn’t know when you’ll die exactly, so the credits or penalties are based on projected life spans set using actuarial data. If you delay claiming benefits, you’re basically gambling on outliving your projected lifespan. If you don’t want to take that chance, or you think there’s a strong likelihood you won’t live longer than projected, you may as well get your benefits ASAP.
Don’t assume claiming benefits at 62 is always the wrong choice
There are a lot of good reasons to claim benefits as late as possible, which is why experts usually recommend waiting until 70 if you can. But those reasons may not apply to you, or you may have even stronger motivations for claiming early. The important thing is that you understand starting benefits at 62 will reduce your monthly income and that you make a conscious choice to do it anyway.
