When it comes to claiming Social Security, you have choices. You could sign up at any age between 62 and 70. In fact, you don't even have to sign up at 70, though there's no financial incentive to delay your filing beyond that point.
Each filing age has its pros and cons. If you claim benefits at 70, for example, you'll score the highest payout possible by delaying your filing. If you sign up at your precise full retirement age (which is 66, 67, or somewhere in between), you'll get your full monthly benefit based on your wage history, but you'll have to sit tight for five full years beyond when you're first allowed to sign up. And if you file at 62, you'll get your benefits as soon as possible, but they'll be reduced in the process.
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Now to be clear, there's no such thing as the right age or the wrong age to claim Social Security. Not only is that a personal choice, but the decision needs to be made based on circumstances that are specific to you. But if you're thinking of signing up for benefits at 62, here's a great reason to go that route.
Locking in a sure thing
Some people file for Social Security at age 62 because they have no choice -- they've been forced out of a job or can't hold one down due to health issues and they need a way to pay the bills. But if you're lucky, you won't land in that situation.
Rather, you may end up in a scenario where you're eager to claim Social Security at 62 so you can retire early or have more money to travel with or enjoy while you're relatively young. The downside of filing at 62, of course, is slashing your monthly benefit for life. But here's the thing -- since you don't know how long you'll actually end up living, claiming benefits at 62 could actually end up working to your financial benefit.
Say you're entitled to a monthly benefit of $1,500 at a full retirement age of 67. If you file at 62, that benefit shrinks to $1,050. But you'll break even around age 78 1/2.
That means that if you live until 78 1/2, you'll have accrued roughly the same lifetime total in benefits regardless of whether you filed at 62 versus 67. And that's precisely why claiming Social Security at 62 can be such a smart move.
While you might hope to live a long life, there's no way to know whether that will happen or not. You might end up living well into your 80s or 90s, or you might pass away in your mid-70s after battling an illness, even if you've been relatively healthy throughout your life. If you file for benefits at 62, you'll get your money as soon as possible -- and potentially increase your chances of walking away with the highest lifetime payout possible.
Now to be clear, if you end up living an exceptionally long life, you'll wind up with a lower lifetime payout by claiming your benefits at 62. But in that case, you'll also have benefited from many extra years of having those payments at your disposal, so either way, there's an upside.
Make the right call
In some cases, filing for Social Security at 62 doesn't make sense. If you have absolutely no savings to bring into retirement and you'll be solely reliant on your benefits to pay the bills, then slashing them by filing early is a dangerous move.
But if you're on the fence, consider the peace of mind you'll get by collecting your money as soon as it becomes available to you. You may find that even if you end up with less money from Social Security in your lifetime, it's still worth taking benefits as soon as you're eligible.
