If there were one universal age at which seniors could file for Social Security, it would perhaps make the decision to claim benefits less stressful. But for better or worse, recipients get an eight-year window to file for benefits that kicks off at age 62 and runs all the way until 70. (Technically, it's possible to sign up for Social Security at an age later than 70, but you'll only lose out on benefits by doing so.)
Since 62 is the earliest age to take benefits, it happens to be the most popular age for filing. But doing so comes with one major drawback: reducing your benefits for life.
Any time you file for Social Security before reaching full retirement age (FRA), you'll take a hit on your monthly benefits. The extent of that hit will depend on your FRA and how early you file, but if you're looking at an FRA of 67, which is the case for anyone born in 1960 or later, and you start collecting benefits at 62, you'll slash your monthly payments by about 30%. And unless you undo your application and pay back that money within a year, you'll be stuck with those lower payments for life.
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It's for this reason that many folks are advised not to file for Social Security as early as possible. But here are a few good reasons to take benefits as soon as you're able.
1. You don't need the money
It might seem counterintuitive to file for Social Security at 62 when you have a fully loaded nest egg and aren't desperate for money. After all, if you don't need those benefits to pay the bills, why not leave them alone and avoid a reduction?
But here's another way to look at it: You're apt to have more energy to travel, pursue hobbies, and enjoy the freedom that comes with retirement at 62 than at 67 or a later age. So if filing early won't put you in a position where you're struggling to pay the bills, then you might as well start using the money you're entitled to when you want it.
2. You have no choice
Maybe you planned on working until full retirement age or even beyond to get the most money possible out of Social Security. But you know what they say about the best-laid plans. In reality, 60% of Americans wind up having to retire sooner than expected, and the reasons run the gamut from health issues to layoffs. So if you happen to land in a scenario where you're out of work and don't have enough savings or other income to pay your bills, you're better off collecting Social Security than racking up debt and falling behind on your obligations.
Remember, if your out-of-work situation is only temporary (say, your company downsized and you're actively looking for a new job), you can always claim your benefits and then undo that move within a year. As long as you repay all of the Social Security income you received, you can then hold off on filing until a later age to avoid a lifelong reduction in payments.
3. You can use the money to make money
Maybe people think of retirement as a time to stop working, when actually, it's the perfect period of life to start a business. So if you're unhappy at your primary job and want to kick off your own venture, filing for Social Security at 62 might allow you to take that leap sooner. Once you start collecting benefits, you can use that money to pay for materials, filing fees, marketing, and many of the other expenses that come with getting a new business off the ground. And while one might argue that you could do the same at age 67 instead and avoid a reduction in benefits, remember that it takes energy and guts to start a business -- and you might have more of both at 62 than at a later age.
Of course, filing for Social Security at 62 isn't always wise. If you're low on savings and have the option to continue working, it generally makes more sense to keep plugging away and hold off on benefits until you've reached FRA or older. But in the above scenarios, taking benefits at 62 could end up being the smartest retirement decision you'll ever make.
