Determining when to start taking Social Security benefits is a critical retirement decision that will affect your monthly income for the rest of your life. The earliest you can file for benefits is age 62, but it will result in permanently smaller checks each month. For that reason, many experts recommend delaying benefits by a few years (up to age 70) to maximize your monthly income.
However, there are situations where claiming as early as possible makes the most sense. While filing at 62 will still reduce your monthly payments, there are two good reasons to consider doing it anyway.
Image source: Getty Images.
1. It makes it easier to enjoy an active retirement
The age at which you retire can have an enormous impact on the types of activities you're able to enjoy. If you're lucky, you may be healthy enough to live an active lifestyle well into your 70s or beyond. But that's not the case for everyone.
Not everyone wants an active retirement, and that's OK. But if you have dreams of traveling the world, running after your grandkids, or spending long afternoons hiking, it may be harder to enjoy those types of activities as you get older.
You don't necessarily have to claim Social Security as soon as you retire. It's possible to retire in your early 60s and then wait until 70 to file for benefits. But if you go that route, you'll need to rely solely on other sources of income for at least several years -- risking depleting your savings too quickly.
When you take Social Security at 62, it's easier to retire earlier, as well. And if you're able to retire when you're still young and healthy, you'll have more time to enjoy an active lifestyle.
2. You can avoid betting on your longevity
Social Security is designed so that, in theory, you should collect the same amount over a lifetime, regardless of the age at which you file. If you claim early, you'll receive smaller payments but more of them in total. By delaying benefits, you'll earn fewer checks, but each will be larger.
These calculations assume you'll have an average lifespan, however. If you have a longer-than-average lifespan, you may collect more in total by delaying benefits. On the other hand, claiming early could be more beneficial if you end up having a shorter-than-average lifespan.
For most people, the break-even point (or the age at which you'd receive more overall by delaying Social Security) is around your early 80s.
If you have good reason to believe you'll live well past that age, delaying benefits could be a smart financial move. But life is unpredictable, and you never know when health issues or other unexpected situations may arise and change your plans.
By claiming early, you might not receive as much as possible from Social Security if you live a very long life. However, you're also not betting on your longevity. If you delay benefits until age 70 and then at 75 develop health conditions, you can't get back those years in your 60s.
Is claiming at 62 the right move for you?
There's no right or wrong age at which to take Social Security, as it will depend on your unique situation. The biggest downside to claiming at 62 is that it will permanently reduce your payments by up to 30% per month. If money is going to be tight in retirement and you know you'll be relying heavily on Social Security, this can be a major disadvantage.
That said, finances aren't the only thing to consider when deciding at what age to file. If you're eager to retire in your early 60s and can afford to do so, claiming at 62 could have a life-changing impact on your retirement.
