Applying for Social Security at age 62 could mean taking as much as a 30% cut to your monthly benefit. That's because 62 is younger than your designated full retirement age, which is between 66 and two months and 67 (depending on your current age). Early filing penalties apply for each month that benefits begin before FRA and can ultimately reduce your checks by a substantial amount.
Despite this, age e62 is one of the most popular ages to file for Social Security benefits. And there are plenty of good reasons for some recipients to go ahead and accept these early filing penalties in exchange for an early claim. Here are three of them.
1. To enable early retirement
Based on what we know about the average Social Security recipient, the chances are good that you won't be able to retire unless you have Social Security checks to help supplement your savings and other income sources.
For many workers, early retirement is a lifetime dream. If claiming Social Security at 62 can make that happen, it may be worth paying the price of lower benefits so you can start enjoying your post-work life as early as you can. Just be prepared to live with that decision.
2. To enjoy your money when you're young
If you're hoping to use your Social Security checks to fund travel or other hobbies that you need to be in good health for, then you might prefer to start your checks at 62 rather than waiting until later in life.
Most people tend to develop more aches, pains, and even serious health issues the further they get into retirement. This can mean that delaying your claim for benefits means your checks start too late for you to enjoy them much.
You may be happy with more money coming in later if you're incurring high medical expenses. But a good number of retirees would prefer to have extra cash from Social Security to enjoy some of their retirement -- even if it means their benefits are smaller.
3. To enable a higher-earning spouse to delay a claim for benefits
If you are married and you and your spouse need some Social Security money to live on, you might decide it makes sense for one of you to claim your benefits at 62. If that's the case, it often should be the lower-earning spouse who starts checks first.
The lower earner can start benefits while the higher earner waits and avoids early filing penalties and even earns delayed retirement credits. Since these penalties and credits are based on a percentage of the retiree's standard benefit, delaying has a bigger impact on a benefit that's larger to begin with. And in some cases, the lower-earning spouse who claimed early may also be able to switch to spousal benefits after the higher-earning spouse files, which could raise their Social Security checks.
Not only can higher earners get a larger benefit by waiting, but they can also boost survivor's benefits as well. When one spouse dies, the survivor gets to keep the larger of the two benefits.
One size does not fit all when it comes to Social Security
These are just three of many potential situations in which claiming Social Security at 62 could be the right move, even if it does result in a lower monthly benefit. They just go to show that there's not a one-size-fits-all approach and that all seniors need to consider their personal goals and financial situation when deciding what's best.