Because you get choices for claiming Social Security, it's a good idea to come up with a filing strategy well ahead of retirement. You may decide to file for benefits at full retirement age (FRA) because that way, you'll avoid a reduction in those monthly checks. FRA kicks in at 66, 67, or 66 and a specific number of months, depending on when you were born.
You can also delay your filing past FRA and score a higher benefit in the process. For each year you hold off until the age of 70, your benefits grow 8%.
On the flipside, you can claim Social Security as early as age 62. Doing so will make it possible to get your money sooner, but for each month you sign up ahead of FRA, your benefits will be reduced permanently. And depending on your specific FRA, signing up for benefits at 62 means slashing them by 25% to 30%, which is not a small hit.
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Despite that very obvious drawback, there are some scenarios when it pays to claim Social Security at 62. And this is perhaps the best reason to go this route.
When it's between a reduced benefit or unhealthy debt
Many seniors plan to work well into their 60s or even 70s, only to have those plans thwarted. And you can't discount the possibility of that happening to you.
You may, for example, have the goal of retiring at age 70 and claiming Social Security then. But what if your company downsizes around the time of your 62nd birthday, and you're unable to find a comparable job? If you don't have enough savings to live on, you may have to file for Social Security or otherwise be forced to pay your bills by racking up serious credit card debt.
Similarly, you may find that health issues prevent you from being able to hold down a full-time job in your early 60s. And those health issues don't necessarily have to be your own. If you have a spouse who develops an illness or encounters mobility issues, you may have to assume the role of caregiver. And that could mean not being able to work and cover your bills without a monthly payday from Social Security.
A good backup plan
It's a great thing to plan on filing for Social Security at FRA or beyond. But a better bet may be to assume that you'll end up having to file at age 62, even if that doesn't come to be.
Once you put yourself into that mindset, it might motivate you to ramp up on the retirement savings front, since you'll need a more robust IRA or 401(k) to compensate for a lower monthly Social Security benefit. Or, it might inspire you to come up with other strategies to boost your retirement income, like downsizing and selling a home strategically.
Filing for Social Security at age 62 is a choice you may end up wanting to make, or it's a choice you might have to make. But the fact that the option is available should at least give you some peace of mind.
