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Social Security retirement benefits first become available to most people when they turn 62, and a sizable fraction of Americans don't wait any longer than that to claim those benefits and arrange for monthly payments to make their way into their bank accounts. Yet the Social Security Administration gives financial incentives to people to wait beyond age 62 to claim Social Security benefits, and so many experts suggest that retirees consider not claiming at their earliest opportunity. Below, we'll run through some of the reasons why claiming Social Security at 62 is smart, and then turn to arguments against claiming at 62. You can then apply what you read to your own personal situation and make the best decision for you.
Why 62 can indeed be a good age to claim Social Security
Listening to some retirement experts, you'd think that it's always a bad move to claim Social Security at 62. But there are several situations in which starting benefits at your earliest opportunity is smart.
First, the primary advantage of claiming at 62 is that you get the maximum possible number of monthly payments from Social Security. The trade-off is that those payments are smaller, but it can take as long as 20 years for those who claim later in order to get larger monthly payments earn enough to catch up to those who claimed at 62. If you have reason to believe that your life expectancy puts the odds of living long enough to catch up against you, then 62 will often be the way to maximize your lifetime benefits.
Also, the way that Social Security coordinates different types of benefits can make it smart to start your monthly checks as soon as possible, with the intent of switching to another benefit later. For instance, if your spouse has passed away, you can choose either to take your own retirement benefits or to take survivor benefits based on your spouse's work history. Claiming your retirement benefits at 62 while waiting until a later age to claim survivor benefits gives you some income now plus the prospect for larger survivor benefits at a later date when you switch.
Similarly, for some people, claiming at 62 is their only chance to get Social Security benefits at all. For example, some people are subject to provisions of Social Security law that force them to give up benefits because they receive pension payments as a public employee without having paid into Social Security through payroll taxes. For those people, the Government Pension Offset and the Windfall Elimination Provision can take away part or all of your Social Security benefits once those pension payments begin. By claiming Social Security at 62 and waiting until later for your public pension to start, you can at least get some benefit checks before those adverse provisions take away most or all of your Social Security.
Why 62 isn't always a good age to claim Social Security
However, the decision isn't always as clear as the situations above suggest. The magnitude of the rise in your monthly checks can be huge if you decide to wait beyond age 62. If your full retirement age is 66, then waiting four extra years will boost your benefit checks by a third. Wait even further until age 70, and you'll receive monthly payments that are roughly three-quarters greater than what you'd get claiming at 62.
Also, if you're still working, then claiming at 62 can be useless because you risk losing part or all of your Social Security payments. Forfeiture provisions kick in for those earning $15,720 or more in a given year before they reach full retirement age, and you'll lose $1 for every $2 you earn above that threshold. For some, even a modest full-time salary can lead to losing large fractions of your retirement benefits. If that's the case, it usually makes more sense just to wait until you leave work before pulling the trigger on your Social Security.
Finally, those who want to provide the biggest possible benefits to family members need to consider the negative impact of claiming at age 62. Survivor benefits are based on the claiming decisions of the person whose work history the survivor is relying on for benefits. If you claim at 62, then not only will you receive smaller monthly payments, but your spouse's survivor benefits will also be smaller. Waiting will boost the size of both checks, and that can be to your family's advantage even if you pass away before you see the positive impact of waiting to claim.
Many people look forward to turning 62 so they can get their Social Security benefits started as soon as possible. However, although there are good arguments supporting that decision for some people, others would be better served by delaying their benefits for a while after their 62nd birthdays.
