Social Security benefits can be claimed as early as age 62. But if you start this early, you'll be claiming them well before your full retirement age (FRA). You need to wait until FRA to get your standard benefit and could face a reduction of up to 30% in your monthly checks if you claim at 62 when your FRA is 67.
While your benefits will be smaller, though, that doesn't mean you shouldn't claim at 62. In fact, there are three good reasons getting your benefits as soon as possible could make a lot of sense.
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1. You don't have to worry about dying before you break even
If you don't claim your benefits at 62 when you first become eligible for them, you miss out on money.
For every month you delay, this missed income must be made up by larger checks later in order for you to break even. And although your monthly checks get bigger the longer you wait (up until the age of 70), you miss out on more income that must be made up.
It can take many years for those larger checks to add up to enough to cover all the benefits you missed by delaying. And you may not live long enough. In fact, the Social Security system is designed based on actuarial tables, so you should theoretically get the same total amount no matter when you claim benefits. This means you'd have to outlive your projected life span to end up better off for having waited.
If you claim at 62, you don't have to worry about outliving your projections just to break even or end up ahead.
2. You're younger and can enjoy life more
Many retirees are surprised to find how early health issues impede their retirement plans. As you get older, the chances of a medical problem increase -- and health issues can prevent you from doing the things you'd always dreamed of.
If you claim Social Security benefits at 62, your checks will provide you with more income when you're still young and able to enjoy spending on travel or hobbies. And for many people, the money from Social Security is necessary to retire, so they could end up having to work during some of their prime retirement years if they wait to claim benefits.
Just be aware that late-in-life health issues are often very expensive. If you've reduced your Social Security checks by claiming them at 62, be ready to cover any healthcare costs later so you don't face a financial crisis due to medical bills.
3. Social Security's buying power is eroding
Beneficiaries get periodic raises, called Cost of Living Adjustments (COLAs). Retirees get these adjustments when a financial index -- the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) -- shows that prices are going up.
But the CPI-W isn't really a very accurate measure of how much prices go up for seniors. That's because the index doesn't give enough weight to the things they spend the most on, such as housing and healthcare. Unfortunately, this means the elderly end up with smaller COLAs than they really need -- which is why Social Security benefits have lost a third of their buying power since 2000.
Since Social Security benefits aren't keeping pace with the inflation retirees experience, it may make sense to start getting benefits ASAP, before their buying power is eroded even further.
Should you claim Social Security at 62?
Claiming Social Security at 62 makes a lot of sense if you aren't confident you'll outlive your projected life span or if you want extra money to enjoy retirement when you're still in good shape. Just understand that claiming early does result in smaller monthly checks, so weigh the pros and cons.
