Americans who qualify for Social Security retirement benefits can choose to start collecting them at any time between ages 62 and 70. There are some valid reasons to wait as long as possible, other good reasons to claim at full retirement age, and other good reasons to claim as early as possible.
In other words, there's no one-size-fits-all "best" age to claim Social Security. But here are three situations where it can be a smart financial move to claim Social Security as soon as you turn 62.
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You stop working before you planned to retire
The most obvious reason to claim Social Security early is that you need the money. Many Americans plan to retire well before their full Social Security retirement age, and claiming Social Security at 62 can help provide the retirement income necessary to stop working. Others plan to keep working and allow their eventual Social Security benefits to grow.
On the other hand, many workers end up retiring earlier than planned, and need the money. In fact, according to a study by Voya Financial, 60% of U.S. retirees had to stop working unexpectedly, mainly because of health concerns or job loss.
Age 62 is the single most common age for claiming Social Security, despite the big benefit reduction that comes from doing so. Many Americans who claim their benefit as early as possible do so simply because they need the money to help cover their living expenses.
Your spouse is already at full retirement age
If your spouse is older than you, and you've been the primary earner, you need to consider Social Security spousal benefits before you decide when you should file.
In a nutshell, spousal benefits guarantee that a lower-earning spouse can get a Social Security benefit of as much as half of the primary earner's full retirement benefit. For example, let's say that you're entitled to a Social Security benefit of $1,500 per month if you wait until full retirement age to claim your benefit. Even if your spouse didn't work at all, he or she would be entitled to a $750 spousal benefit at their full retirement age, based on your work record.
Here are the two key points for this discussion. First, there's no increase in a spousal benefit for waiting beyond full retirement age to claim. In other words, if your spouse's full retirement age is 66, there's no benefit for them waiting until 67 or 68 to claim it -- their spousal benefit won't be increased.
Second, in order for your spouse to claim a benefit on your work record, you have to be collecting your own Social Security retirement benefit. For these two reasons, if your spouse expects to collect a spousal benefit on your work record, it often isn't a great idea to wait past their full retirement age to claim Social Security.
You're in poor health
Social Security is designed so that the average American collects the same amount of retirement benefits throughout their lifetime, regardless of the age at which they claim. This is based on Social Security's actuarial life-expectancy tables.
As an example, the average 62 year old can roughly be expected to live another 21.5 years, while the average 70 year old has a life expectancy of about 15.4 more years. The idea is that, while the average 62 year old will collect benefits for six additional years, the higher monthly benefit that comes from waiting until age 70 should offset this when accounting for inflation.
However, keep in mind that this is based on averages, not your personal situation. If you're in relatively poor health, have a family history of heart disease or premature death, or otherwise have good reason to believe that you won't live as long as the average American, it can make good financial sense to claim Social Security as early as possible.
The Foolish bottom line
These are just three of the many possible reasons why you might be better off claiming Social Security as early as possible. And as I mentioned in the introduction, there are also several good reasons why Americans might want to wait. In many situations, reasons from both ends of the spectrum will apply to you.
The takeaway is that claiming Social Security is a very important financial decision, and all of the reasons for claiming early, on time, or late should be carefully considered to determine the best option for you and your loved ones.
