One of the nice things about Social Security is that you're not forced to claim benefits at one specific age. Rather, you get a range of ages to choose from.
Once you turn 62, it's possible to claim benefits at any age. But if you want your full monthly benefit based on your wage history, you'll need to wait until full retirement age (FRA) to sign up for Social Security. FRA kicks in at 67 if you were born in 1970 or later.
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Many people rush to claim Social Security at 62 since it's the earliest opportunity to do so. But I'm not a fan of that approach for one big reason.
There aren't many income sources in life that are guaranteed
You might come into retirement with a solid nest egg. But is that money guaranteed to last? Not at all.
On the other hand, the monthly Social Security benefit you lock in when you first file is the benefit you're guaranteed to collect for life. And frankly, that's a big deal.
You might start off your retirement with a nest egg large enough to support monthly withdrawals of $2,000. But if your investments underperform, your nest egg might provide a lot less monthly income. And that could leave you in a position where you have to seriously adjust your spending.
On the other hand, if you lock in a monthly Social Security benefit of $2,000, that's the sum you're set to collect as long as you're alive. If you slash your monthly benefit by filing early, you'll have much less income to fall back on in retirement.
To be clear, if you're in line for a $2,000 monthly benefit at an FRA of 67, claiming Social Security at 62 will leave you with just $1,400 a month, instead. That's a huge hit to your ongoing income.
That's the primary reason why I don't recommend claiming benefits at 62. You may like the idea of getting your money ahead of schedule, but filing at 62 means accepting a lower monthly benefit for life. And that could be risky.
If you're tempted to claim Social Security at 62, take some time to ask yourself why. Is it so you can retire early? If so, see if scaling back on work allows you to enjoy a lighter schedule without committing to a reduced monthly benefit for life.
And if you're tempted to file early because you're afraid Social Security is running out of money, realize that if benefit cuts come down the pike, an early filing will only leave you with that much less income month after month. That's really not something that's going to work to your advantage.
All told, it's easy to see the appeal of filing for Social Security at 62. But that doesn't make it a great idea. If you're leaning toward an early filing, do consider the impact it might have on your retirement. You'll be setting yourself up for a smaller monthly benefit for life, and that can be a scary thing.
