Social Security benefits can be claimed as early as 62 years of age, and many older Americans take advantage of the opportunity to start receiving them as soon as possible. Unfortunately, those who claim early often wish they hadn't, according to the 2019 MassMutual Social Security Pulse Check.
Claiming benefits at age 62 comes with a big loss in monthly income, thanks to early filing penalties. Sadly, many retirees who start their benefits at this young age do so not because they want to, but out of financial necessity.
In fact, the MassMutual research identified three big reasons why people end up claiming benefits sooner rather than later.
Financial necessity and two unexpected events
According to the Social Security Pulse Check, the No. 1 reason people claim Social Security at age 62 was financial necessity.
A full 53% of survey respondents indicated this was the driving force behind their decision. These seniors either had to retire or chose to retire, and simply did not have enough savings to sustain them without relying on Social Security.
The other top two reasons for claiming Social Security at 62 instead of waiting longer had to do with events that people couldn't foresee happening. They included unanticipated employment issues that led to their facing a change in job status, as well as changes to their health status that had impacts on their income-generating ability. Around 30% of those who claimed at 62 indicated these issues lead to their early benefits claim.
How to avoid claiming early
No one wants to be forced to claim Social Security before they're ready. To make sure this doesn't happen to you:
- Bulk up your retirement savings accounts: If you have ample money in retirement accounts, you can rely on your savings if you have to leave work at 62. You won't have to claim Social Security benefits early just to make ends meet.
- Consider claiming disability benefits: If a health issue prompts you to leave the workforce at 62, consider whether you can claim Social Security Disability benefits instead of retirement benefits. By opting for SSD benefits instead, you can avoid the penalty for early retirement and potentially qualify for a disability freeze. With this freeze, years that you earn less money because of your disability won't lower your Social Security retirement income.
- Understand your rights when seeking employment: Age discrimination is illegal, and employers cannot fire you or refuse to hire you because of your advanced age. Understanding your rights could potentially help you avoid having to claim benefits early due to being forced out of your job.
- Look into part-time employment options: If employment or family-related issues prevent you from working full time, consider whether part-time work could make it possible for you to delay your Social Security benefits claim and avoid a penalty for retiring early.
The only option you have full control over is your savings, so aggressively putting aside funds for retirement is the single best way to ensure you won't be forced to claim Social Security at 62.
Plan for claiming Social Security benefits early
Because so many people claim Social Security benefits early out of necessity, it's important not to plan your retirement around the idea that you'll be able to work well into your 60s.
Prepare for retirement at 62, and if you're able and willing to work longer, you'll just end up with extra money to enjoy your golden years.