Many seniors regard Social Security as a crucial income source. And those benefits may come in very handy for you during retirement as well. Even if you're not so reliant on them for paying your basic bills, they could still make it possible to travel, stay in a larger home, or do the other things you've always dreamed of doing during your senior years.
Now you're entitled to your full monthly Social Security benefit based on your personal earnings history once you reach full retirement age, or FRA. FRA is either 66, 67, or somewhere in between, depending on when you were born.
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But you're allowed to sign up for Social Security beginning at age 62. Doing so will result in a reduced benefit -- for life. But despite that hit, here are a few good reasons to claim benefits as soon as you're able to.
1. You want a new job -- one where you call the shots
Americans are living longer these days, and stopping work for good at age 62 might seem unnecessary. More so than that, it might read like a nightmare if you're the type of person who thrives on structure and worries about being bored.
But if you file for Social Security at age 62, you don't necessarily have to stop working at that age. Instead, you can use the benefits you collect as seed money for a business you start. Or, you can use the money to venture out on your own as a freelancer, knowing that if you don't manage to replace your former paycheck in its entirety, you can supplement it with the benefits you collect.
Going this route might make you a lot happier professionally. And if anything, that could lead to you working longer.
2. You're single and don't expect to live a long life
While claiming Social Security at age 62 will result in a lower monthly benefit, it may not result in a lower lifetime benefit. If your health isn't in great shape and you don't expect to live a long life, signing up for benefits at 62 could mean collecting more lifetime income from the program.
But this logic only applies if you're single, and you therefore have only your own needs to consider. If you're married, you may not want to file for benefits at age 62 if you think your spouse will outlive you by many years.
Once you pass away, your spouse will be entitled to survivors benefits, and those will match the monthly benefit you collect. And so if you want to buy your spouse more financial security, you may want to file for benefits at a later age than 62.
3. You've earned the right to sign up for benefits when you please
If you're kicking off retirement with little money socked away in an IRA or 401(k) plan, then filing for benefits at 62 could be disastrous. Slashing your benefits by claiming them early could make it so you're unable to pay your bills.
But if you're sitting on a multi-million-dollar nest egg, then filing for benefits at age 62 absolutely makes sense. In that scenario, Social Security will likely represent just a small portion of your total retirement income. And if collecting that money early allows you to maximize your good health -- perhaps by traveling more while you still have the energy -- then that's something you should absolutely let yourself do.
Make the right call
For some people, filing for Social Security at age 62 is a poor choice -- one that could have dire financial consequences. But if any of these factors apply to you, then signing up for benefits at 62 could end up being one of the wisest retirement decisions you'll make.
