Given soaring inflation and rising interest rates, Social Security stands to play an even more important role in retirees' income and spending plans. Perhaps now more than ever, people need to be able to rely on guaranteed monthly income to cover predictable expenses in retirement.
Conventional wisdom says that you'll end up with more money by waiting until 70 to file for Social Security benefits, which is true to a large extent. However, there's a large segment of the population who would be better off claiming benefits as soon as possible.
Below, we'll briefly review four reasons you might consider taking Social Security at 62.
1. You're in poor health
If you're facing health challenges, you'll need to consider your life expectancy before filing a Social Security claim. If you don't expect to live into your mid-80s or beyond, you're likely better off to take the money sooner, simply because you know you'll be here to receive it.
However, keep in mind that there are some things you may need to consider about family benefits. Overall, this is a risk-and-reward calculation you'll need to consider with your family and, ideally, an objective financial planner.
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2. You need or want the money
This is pretty much as simple as it gets: You take Social Security when you need or want the money. Given the dwindling population of defined pension plans -- combined with stock and bond markets that didn't cooperate in 2022 -- it's no shocker that people want access to more guaranteed income.
Since Social Security behaves as a minimum spending floor in retirement, filing for benefits can make a lot of sense for those who need dependable cash in the door every month. If you decide it's time to file for any reason, don't be shy to go for it.
3. You don't enjoy your job
If you're working in a career that doesn't bring you some satisfaction, the fact that it might be "tolerable" may not really cut it once you hit your 60s. Working in a toxic or unpleasant environment can lead to a host of mental and physical issues, which is why you might think about claiming Social Security benefits as soon as they're available to you.
The lure of more money down the line might sound nice, but it might also be impractical to wait if you want to change the structure and mood of your life.
4. You're the lower-earning spouse
Some couples employ a strategy whereby the lower-earning spouse takes Social Security at 62 and the higher-earning spouse waits as long as possible to claim benefits. This allows the couple to collect some income in the interim, while the higher-earner's benefits grow by 8% for every year they delay their claim past full retirement age ("FRA").
Once the higher-earning spouse finally claims benefits, the lower-earning spouse can switch to "spousal benefits," or 50% of the higher-earner's benefits. This makes sense to do if the couple's spousal benefit exceeds the lower-earning spouse's individual benefit.
Examine your own situation
You'll find that nearly everyone has a theory on the best time to take Social Security, but the only one who truly knows what's best for you is you. Take an appropriate amount of time alongside your family to review your options, and don't be afraid to consult a fee-only financial planner for advice if you need it.
Taking Social Security is a big decision. Before you file for benefits, be sure that you understand exactly what you're getting and what you're giving up. In the end, move forward confidently with the choice that serves you in a way that feels right.
