Maximizing your Social Security benefit is a bit like a chess game. You need to understand the factors at play and how the moves you make could affect you down the road if you want to be successful. This includes choosing the right time to claim benefits.
A lot of people caution against signing up right away at 62 because doing so reduces the size of your checks by up to 30%. But there are times when that's the right move, even if it means settling for a smaller lifetime benefit.
If the following applies to you, you should definitely plan to sign up early.
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Maintaining your financial security is key
Some people prefer to delay Social Security because it grows their checks a little each month until they reach their maximum benefit at 70. How much more you get depends on your work history and your full retirement age (FRA). This is 66 to 67 for most people.
Someone eligible for a $1,500 monthly benefit at 62 with an FRA of 67 would get $2,657 per month if they waited until 70 to sign up. That's a difference of over $1,100 a month.
But if you plan to do this, you'll have to cover all your expenses between 62 and 70 on your own, and that's not feasible for everyone. A senior struggling to pay their bills without Social Security might have to drain their retirement savings more quickly or take on debt, both of which could put their future financial security at risk.
A larger Social Security check in the future may not be enough to get you out of debt or replenish your depleted retirement savings. So it's best not to put yourself in this situation. Signing up for Social Security early could lead to a smaller lifetime benefit, but it could also give you more financial stability and enable you to stretch your personal savings further.
What to do if you don't want to sign up at 62
Signing up at 62 makes sense in the above situation, but that doesn't mean it's the most desirable solution.
If you don't want to shrink your checks that much, and you're still healthy enough and willing to work, you could remain in the workforce for longer before retiring. Or if you're already retired, you could take a part-time job to give yourself some extra money coming in. Use this to supplement your personal savings until you're ready to sign up for Social Security.
You could also compromise by delaying benefits for a shorter time. Perhaps you decide to wait until FRA to sign up or until you turn 65. This way, your checks will still grow for a little while, but you won't be on your own until you turn 70.
Another option if you have a pressing need for money in the short term is to claim early and then suspend benefits once you reach your FRA. When you do this, the government will halt your checks until you either request that they begin again or you reach 70. During the time that you're not receiving benefits, you'll accumulate delayed retirement credit, which will boost the size of your future checks.
You won't wind up with as much as you would've gotten if you'd waited until 70 to apply in the first place. But you could grow your check by up to 24% or 32%, depending on your FRA.
If all that sounds like too much work, there's no harm in signing up at 62 and continuing to claim checks for the remainder of your life. If that's what's most convenient for you, don't feel bad about doing it. Just make sure you've evaluated all your other options first so you know you're making the best possible decision for you.
