Your monthly Social Security benefit in retirement is yours to collect in full once you reach full retirement age. Your FRA is either 66, 67, or somewhere in between, depending on the year you were born.
Meanwhile, you can claim Social Security before or after FRA. Go the former route, and your benefit will shrink, but you'll get your money sooner. Delay your filing, and you'll score a higher monthly payday for life.
The earliest age you can sign up for Social Security is 62, and it's also the most popular among seniors. And here are three reasons why it pays to choose it as your filing age, too.
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1. You want to retire early
Many people dream of early retirement and work hard to save and make that happen. But you may need a little financial boost outside of your IRA or 401(k) to leave the workforce when you want to.
As long as you're sitting on a healthy level of savings and can afford a permanent hit to your monthly benefit, claiming Social Security at 62 could be a great way to meet a goal you've long worked hard for.
2. You've been forced to retire early
Some people retire early not by choice, but because circumstances drive them out of the labor force ahead of schedule.
It could be the case that you're downsized out of job, and that you struggle to find another one. (Unfortunately, the older you are, the harder it is to get hired.) In that case, Social Security could help you pay the bills in the absence of a paycheck.
Also, your health might cause you to need to leave your job in your early 60s. Again, Social Security could come in and pick up the slack.
3. You're not in the best of health
Social Security is technically designed to pay you the same total lifetime benefit, regardless of when you file. The logic is that claiming early will give you a lower benefit but more monthly payments, while filing after FRA will give you fewer payments but more money each month.
But that rule only applies if you live an average lifespan. If your health is poor and you think you'll pass away at a relatively young age, then claiming benefits as early as possible makes more financial sense.
For example, if you're entitled to a $1,500 benefit at an FRA of 67, filing at 62 will leave you with $1,050 a month instead. But you'll also start getting those benefits five years sooner. If you pass away at age 76, which is relatively young, you'll end coming out over $14,000 ahead by filing for Social Security at 62.
What's the right move for you?
For some people, filing for Social Security at 62 is the wrong move. If your health is great, for example, then delaying your filing could leave you with a higher lifetime benefit. And if you have very little money saved for retirement, slashing your benefits may not be the best idea.
But if the above situations apply to you, then it pays to consider getting your hands on your Social Security income as soon as you can. It could be your ticket to meeting your retirement goals, paying the bills when you're backed into a wall, or coming away with more money from Social Security in the course of your lifetime.
