One of the most significant (and difficult) financial decisions you'll make in your lifetime is choosing a Social Security filing age. And in that regard, you get several choices.
Your actual Social Security benefit is calculated based on your wages during your 35 highest-paid years in the labor force. You're then entitled to that benefit in full once you reach full retirement age (FRA). If you were born in 1960 or later, your FRA is 67. Otherwise, it's either 66, or 66 and a certain number of months.
However, you're allowed to sign up for Social Security beginning at age 62. You can also delay your filing until the age of 70.
Image source: Getty Images.
Postponing your Social Security claim will help you grow your benefit substantially. If your FRA is 67 but you sign up for Social Security at age 70, your benefit will increase by 24%. On the other hand, if you claim it at age 62, it'll shrink by 30%.
In spite of that, there are some scenarios where it makes sense to accept a smaller Social Security check. And if this one applies to you, then there's no reason you shouldn't sign up for benefits as soon as you're eligible.
When you've earned the right to retire early
The concern with claiming Social Security at age 62 is locking in a lower benefit and not having enough money to live on during retirement. But if you've managed to accumulate a nice pile of retirement savings, then that alone could buy you the flexibility to sign up early, even if it means reducing your monthly benefit in the process.
Now, say you've worked hard all your life and you have a really nice nest egg at your disposal by the time age 62 rolls around. At that point, you deserve to indulge in the things you've always dreamed of doing. Maybe that means traveling a lot. Maybe it means quitting your high-paying but stressful job and venturing out as an independent baker, which will pay you a lot less but be far more rewarding.
No matter your specific circumstances or plans, if you've saved very well for retirement and claiming Social Security at 62 will help you enhance your quality of life or meet a specific goal, then it's worth doing. While you will lose out on a higher benefit during retirement, you'll also get to take advantage of the here and now.
Let's face it -- a lot of people see their health and energy decline as they get older. You might be in great shape at 62, but will your health status change by the time you reach 67? It's hard to say.
If you've really saved nicely for retirement and can afford to claim benefits at 62, then it's time to reward yourself for a lifetime of hard work. Many people reach the end of their lives and bemoan the things they didn't do. Filing for Social Security as early as possible is a good way to leave yourself with no regrets.
