As you may know, the Social Security Administration assigns each of us a "full" retirement age at which we can collect our full benefits. But you can choose to start collecting that income as early as age 62 or as late as age 70. For maximum financial security, there are some powerful reasons to start at 62.
First, though -- what's your full retirement age? Well, for those born in 1937 or earlier, it's 65, for those born in 1960 or later, it's 67, and for those born between 1937 and 1960, it's somewhere in between. Despite that, 62 is the age at which most people start collecting Social Security. Here's why you might want to join them.
You might need to retire early
A key reason you might need or want to start collecting your benefits early is because life often doesn't go according to plan. The 2016 Retirement Confidence Survey found that 46% of retirees left the workforce earlier than planned, with 55% citing health problems or a disability as the reason and 24% citing changes at work such as a downsizing or workplace closure.
Given that there's a decent chance that we'll end up retiring earlier than expected, it's nice to know you can start receiving income from Social Security at 62. After all, if you retire earlier than you expected or planned, you'll likely have less money banked to support a comfortable retirement and may be in even greater need of Social Security dollars.
The bigger delayed checks may not be worth it
The main reason many people choose to start collecting Social Security late is most likely this: The longer you wait, until age 70, the bigger your checks will be. For every year beyond your full retirement age that you delay, your benefits will increase in value by about 8% -- up to age 70. So delay from 67 to 70 and you can make your checks fully 24% bigger. If you were expecting to collect $2,000 per month ($24,000 per year), you can instead receive $2,480 per month (or nearly $30,000 annually).
That can make it seem like a no-brainer decision to hang on as long as you can before claiming your benefits. But hold on -- the Social Security Administration has explained, "If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between." After all, if you delay starting to collect from age 67 to age 70, you will miss out on three years' worth of payments (albeit smaller ones) -- that's 36 payments.
Delaying starting to collect can make sense in some cases, of course. Perhaps you're perfectly happy working and want to work until your late 60s or age 70 or beyond. Perhaps many people in your family have enjoyed very long lives, in which case collecting bigger checks for a longer-than-average time can be worth it. For many of us, though, delaying won't be very worthwhile.
Claiming Social Security early may help you retire early
Finally, a big upside of claiming Social Security at 62 is that it can help you retire early, whether you need to or not. If your family tree is full of people who lived shorter-than-average lives, claiming your benefits early can be very smart. You might as well enjoy the money while you're still around -- and if you beat the odds and live a long life, you'll still be collecting benefits.
Few of us have a good idea of just how long we'll live, so if you can retire early, you'll give yourself the best chance of being able to enjoy a lot of years without work. Claiming benefits early can help with that. Early retirees are often in a better position to enjoy their money more, being younger, healthier, and more able to travel, enjoy recreation, and so on.
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