Determining when to begin claiming Social Security is a big decision. It will affect your monthly income for the rest of your life.
The earliest you can file is age 62, but by holding off on collecting benefits, you'll receive larger payments each month. While delaying Social Security may seem like a wise move on the surface, there are also a few compelling reasons to claim early.
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When it makes sense to claim at 62
1. You want to get a jump-start on retirement
Many workers spend decades looking forward to retirement. If you wait too long to retire, however, you could miss out on valuable time to enjoy your senior years when you're still relatively young and healthy.
Of course, you don't necessarily need to claim Social Security as soon as you retire, but the two often go hand in hand. If you're eager to retire in your early 60s, filing for benefits at 62 can provide an additional source of income and make retirement more affordable.
2. You need the extra income
Unfortunately, not everyone has the luxury of deciding when to retire. If you lose your job and are forced into an earlier-than-expected retirement, Social Security benefits can be a lifeline.
Even if you have a strong retirement fund, claiming early can still sometimes be a smart move -- particularly during a recession or economic downturn. When stock prices fall, your investments will lose value. If you withdraw your savings now after the market has dropped, you may be selling your investments for less than you paid for them -- locking in those losses.
By taking Social Security, though, you can withdraw less from your savings and help your money last longer. While you will receive smaller checks by claiming early, that can sometimes be preferable to draining your savings too quickly.
3. You're facing health issues
In theory, you should collect roughly the same amount from Social Security over a lifetime, regardless of the age at which you file. By claiming early, you'll receive smaller checks but more of them in total. Delay benefits, and you'll earn larger checks, but fewer of them overall.
However, this assumes you'll have an average life span. If you live well into your 80s or beyond, you could actually receive more in total if you delay benefits. But if you end up living a shorter-than-average life, you could come out ahead by claiming early.
This isn't the most pleasant topic to think about, and of course, nobody can predict their life span with 100% accuracy. But if you have reason to believe you may not live into your mid-80s or beyond, claiming early could be a smart financial move.
Why you may consider delaying benefits
1. You want a larger benefit amount
While claiming early has plenty of perks, there's one fantastic reason to consider holding off on benefits: You'll receive significantly larger payments each month.
Again, your lifetime benefit amount should be roughly equal, regardless of when you claim, assuming you have an average life span. But your monthly payments will be substantially larger if you delay claiming.
For example, say you have a full retirement age of 67 years old, and by filing at that age, you'd collect $1,800 per month. If you were to claim at 62, your benefit amount would be reduced by 30%, leaving you with $1,260 per month.
| Age You Begin Claiming | Monthly Benefit Amount |
|---|---|
| 62 | $1,260 |
| 65 | $1,561 |
| 67 | $1,800 |
| 70 | $2,232 |
Source: Social Security Administration.
However, if you were to delay benefits until age 70, you'd receive your full $1,800 per month plus an extra 24%, giving you a total of $2,232 per month. That's an extra $972 per month, compared to claiming at 62. If you need the extra cash and are able to wait, that extra money could be life changing.
There's no one-size-fits-all approach as to when you should claim Social Security. In some cases, filing at age 62 makes the most sense, while other people may be better off waiting. By weighing the pros and cons of both options, it will be easier for you to decide when to claim.
