The monthly Social Security benefit you're entitled to in retirement will hinge on your personal earnings history, and also, the age at which you sign up. If you wait until full retirement age to claim Social Security (which is 66, 67, or somewhere in between), the monthly payday you're eligible for based on your wage history won't be reduced. But if you file early, you'll lock in a lower monthly benefit for life.
Meanwhile, age 62 is the earliest age you can sign up for Social Security. And so not surprisingly, it's a pretty popular age to file.
The downside, though, is you'll slash your monthly benefit substantially by collecting it as early as possible. And that could potentially lead to cash flow problems later in life.
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Despite that risk, claiming Social Security at age 62 often makes sense. And you should feel confident doing it in these situations.
1. You want to make a career change
If you're completely burned out career-wise by the time you turn 62, that alone could drive you into early retirement. And that could mean shorting yourself on your nest egg and having to pull from your savings earlier in life, thereby running the risk of depleting your cash reserves in your lifetime.
But if a career change is what it takes to keep you in the workforce for many more years, then it pays to go for one. And if that means taking a pay cut, then it makes sense to claim Social Security and use your benefits to supplement your income while you gain experience and work your way up in a new, more rewarding field.
2. You're worried you won't live a long life
Social Security is actually supposed to pay you the same lifetime total regardless of when you initially claim benefits. Think about it this way -- filing at age 62 will mean getting less money each month, but enjoying more months of benefits. Waiting to file will mean getting more money each month, but over a shorter period of time.
All told, things should even out if you live an average lifespan. But if you have reason to believe you'll pass away at a relatively early age, then it pays to claim Social Security at 62. Doing so could mean getting a higher lifetime benefit from the program.
3. You've saved so much that you can claim benefits whenever you want
You may end up being heavily reliant on Social Security if you're approaching retirement with a nest egg worth $200,000 (while that's a nice amount of money, it's not a ton over what could be a 20-year retirement or more). And you should definitely expect to fall back on Social Security a lot if you have no savings at all.
But if you're sitting on a nest egg worth millions, then frankly, you've earned the right to claim Social Security whenever you want to. And so if signing up at age 62 gives you more money to travel with or use for another purpose that brings you joy, you might as well go for it.
There's an obvious downside to claiming Social Security at age 62, and it's leaving yourself with less income to look forward to on a monthly basis. But if these reasons apply to you, then filing at 62 makes a lot of sense despite the lower monthly benefit involved.
