You can start Social Security as soon as you turn 62, but doing so is considered claiming early -- and it comes at a price.
See, everyone has a full retirement age set by law, which is between 66 and 67 depending on when you were born. Filing for benefits any time before it can permanently reduce the size of your checks.
Shrinking your retirement benefits often isn't the financially optimal choice if you're looking to get the most lifetime income. But there are some circumstances where it definitely makes sense to claim your Social Security at 62. Here are three of them.
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1. You're protecting your investment account balance
Whether you retire because you want to or because you have to, you're going to need some money to live on once your paychecks stop. And chances are good your funds will come from two primary sources: Social Security and your retirement investment accounts.
You'll need your retirement accounts to last for life, so you can't withdraw too much from them too soon. If putting off claiming Social Security would necessitate draining your 401(k) or IRA to cover your basic costs, starting your checks at 62 and preserving your savings by enabling smaller withdrawals is likely your best choice.
After all, if you take so much out of your savings account that you're stuck living only on Social Security later, you're likely to find yourself in dire financial straits.
2. You're aiming to minimize taxes on your benefits
Social Security benefits are not taxable until your provisional income reaches $25,000 as a single tax filer or $32,000 as a married joint filer. After you hit these thresholds, between 50% and 85% of benefits are subject to federal tax depending on the amount you earn.
Provisional income isn't all income -- it's half of Social Security plus other taxable income and some non-taxable income. The problem is, income from traditional 401(k) and IRA accounts will count as taxable income.
If you have a hefty retirement account balance, the government mandates you begin required minimum distributions at the age of 72. And your RMDs could end up pushing your provisional income above the threshold where your benefits become taxable.
If you want to minimize the amount of your benefits going to the IRS -- and can afford to put off taking large 401(k) or IRA distributions -- it may make sense to take your Social Security at 62, keep your provisional income below the threshold, and enjoy a decade of tax-free benefits before you must start taking RMDs.
3. You're hoping to enable early retirement
If you've worked hard all your life, you may want to retire early. Or you may need to retire early because you're no longer healthy enough to work or have few career opportunities late in life.
In many situations, it's not possible to live without a paycheck unless Social Security benefits provide some money to cover your expenses. If claiming your benefits at 62 makes early retirement financially feasible when it otherwise wouldn't be an option, you may be more than willing to pay the price of smaller benefits. Just be certain you really understand the trade-off before you decide.
