Many seniors struggle with when to claim Social Security, and for good reason. Aside from cost-of-living adjustments, the monthly benefit you start out with will be the same monthly benefit you collect for life, and your filing age will determine what that benefit looks like.
You're entitled to your full monthly benefit based on your earnings history at full retirement age, which is either 66, 67, or 66 and a certain number of months, depending on the year you were born. You can also delay your benefits up until age 70 and boost them by 8% a year in the process, or file before full retirement age in exchange for a reduced benefit. In fact, the earliest age you can sign up for Social Security is 62, and if you go that route, you'll permanently shrink your monthly benefit by 25% to 30%, depending on your full retirement age. But in spite of that, it still pays to sign up for benefits at 62 if these situations apply to you.
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1. You're out of work and need the money
Many older people are being pushed out of the workforce now, while the economy is in a recession. But that sort of thing actually happens all the time -- even when economic conditions are more favorable. If you've lost your job and don't have enough personal savings to cover your bills without that paycheck, then filing for Social Security absolutely makes sense. While you'll shrink your benefits, you'll do less damage than you would by racking up costly debt just to live.
2. You have healthcare expenses you can't afford
Healthcare issues can creep up on us when we least expect them to, and unfortunately, the older we get, the more likely we are to start grappling with unforeseen medical bills. If you have a health savings account or money earmarked for medical expenses, then covering your costs may not be a huge deal. But if you don't have money set aside for healthcare expenses, you may need to turn to Social Security to bridge that gap.
3. You've saved enough that filing early doesn't matter
The drawback of claiming Social Security early is lowering your monthly benefit for life. But what if you have more than enough money in your IRA or 401(k) to live comfortably throughout retirement? If that's the case, filing at 62 may not hurt you financially, and so at that point, you might just choose to take your money and use it to enjoy the early part of your later years. Your benefits could make it possible to travel, buy a summer home, or do the many things you've always dreamed of doing, so if claiming Social Security early won't hurt you in the long run, why not go for it?
When it comes to signing up for Social Security, there's really no such thing as a right age or a wrong age. While there's a definite downside to claiming benefits at 62, if any of the above scenarios apply to you, filing then could truly end up being the best call.
