Filing for Social Security at age 62 means locking in a lower monthly benefit for life. That's because you're not entitled to your full monthly benefit based on your wage history until full retirement age (FRA) kicks in. And that won't happen until age 66, 67, or somewhere in between, depending on your year of birth.
Filing for Social Security before FRA means settling for a reduced benefit, and that's not always a good thing. But in some situations, it makes sense. Here are just a few scenarios where it pays to file for benefits at 62.
1. Healthcare is costing you an arm and a leg
Some people are fortunate enough to have heavily subsidized health insurance through their jobs. But not everyone has access to a subsidized employer plan. It may be that you're self-employed, and you're therefore responsible for securing health coverage on your own.
If you're having trouble covering the cost of things like premiums, deductibles, and copays, then claiming Social Security at age 62 could put you in a better position to manage your health. It could also help ensure that you're not forced to skimp on care due to financial concerns.
Remember, Medicare eligibility doesn't start until age 65. At that point, you may end up spending less on healthcare if your current coverage is very expensive. But claiming Social Security at 62 could help you get through a few more years of higher costs.
2. You want to make a career change while you're still young enough to work
Some people wind up staying at the same job for years on end because it's stable and pays the bills, even if it's far from their dream job. But what if you're a 62-year-old accountant who's always wanted to know what it's like to work as a musician?
Making that switch could mean taking a big pay cut. But if you claim Social Security early, your benefits might make up for that drop in income, all the while allowing you to do something you've always wanted while you're young and healthy enough.
3. You have a large enough nest egg to cover your essential bills
If you're in your early 60s with very little money socked away, then claiming Social Security at 62 could be a dangerous move -- namely, because you might need a higher monthly benefit to compensate for a lack of savings. But if you have a giant nest egg, and the money you receive from Social Security will largely be used for things like leisure and travel, then you might as well get that money as soon as you can.
In fact, if you did a great job of saving money through the years, then you deserve to claim Social Security as soon as you're eligible. Maybe you skipped out on big trips during your career to boost your IRA or 401(k) contributions. If so, now's the time to make up for that by collecting Social Security and getting out to see the world at an age when you have more energy.
Is claiming Social Security at 62 the right move for you?
In some situations, filing for Social Security early is a decision that could sorely backfire. But if you're struggling to pay for healthcare to the point where you may have to neglect medical issues, you're itching for a career switch, and you have a nice-sized nest egg, then claiming Social Security at 62 makes a ton of sense. And in these cases, you shouldn't feel bad about locking in a smaller benefit -- even if you do wind up stuck with it for life.