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Sorry to Say: You Probably Shouldn't Claim Social Security at 62

By Maurie Backman - May 10, 2021 at 5:04AM

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You may be tempted to sign up for benefits as early as possible, but that's a decision that could backfire on you.

You have choices when it comes to signing up for Social Security. Many seniors opt to claim their benefits at full retirement age, or FRA. That age is either 66, 67, or somewhere in between, depending on the year you were born, and it's when you're entitled to your full monthly benefit based on your personal wage history.

But you're allowed to sign up for benefits before or after FRA as well. If you delay your filing, you'll boost your benefits by 8% a year, up until you turn 70. And if you claim benefits before FRA, you'll reduce them in the process.

The earliest age you're allowed to sign up for benefits is 62, and not surprisingly, it happens to be the most popular age for seniors to file. But while you may be eager to go that route, here's why claiming Social Security at 62 is a move you might sorely regret.

Social Security card

Image source: Getty Images.

Retirement will probably cost more than you think

Many seniors enter retirement expecting their living costs to drop dramatically. But the reality is that a lot of retirees wind up spending a comparable amount of money to what they spent while they were working, and if we dig in a bit, it's easy to see why.

Once you retire, you might manage to shake a few expenses. You won't have to commute to work, for example, and you won't have to make contributions to a retirement savings plan because you'll already be in retirement.

But those expenses aside, you may find that your remaining bills either stay the same or go up. In fact, think about your home. You might manage to pay it off several years before retirement, at which point you're left with just insurance, property taxes, and maintenance to deal with. But property taxes have a sneaky way of rising, and as homes age, they tend to need more upkeep and repairs. As such, your housing costs could climb during your senior years, even if your mortgage is fully paid off.

Furthermore, while you may not need to commute to a job, you'll probably still need a car (unless you live someplace with adequate public transportation), and that means paying for insurance and maintenance -- costs that don't go away in retirement. If anything, you might pay more for auto insurance due to your age and the fact that you may be considered a higher risk.

Then there's food, utilities, and other basics, like having access to a phone. None of these things go away in retirement. And let's not even get started on healthcare, which is often a whopping expense for seniors.

It's for this reason that filing for Social Security at 62 and slashing your monthly benefits is a move that could leave you cash-strapped throughout your senior years. By reducing your benefits, you'll leave yourself with less money on an on ongoing basis to cover your many expenses. And while you may have savings to fall back on, there's always the potential to deplete them prematurely -- whereas Social Security is guaranteed to pay you a monthly benefit for the rest of your life.

Of course, it may be tempting to file for benefits as early as you're entitled to them, and for some people, claiming Social Security at age 62 is a smart idea. But if you're going to file for benefits early, think things through first and have a reason. And also, have a realistic view of what your retirement expenses will actually amount to. When you crunch the numbers, you may find that your living costs are much higher than expected -- and that you can't afford to slash your benefits in light of that.

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