The age you begin taking Social Security is one of the most important retirement decisions you'll make.
You can file for benefits as early as age 62, but the longer you wait (up to age 70), the more you'll receive each month. While there's not necessarily a right or wrong time to start taking Social Security, there are major advantages and disadvantages to consider.
Claiming as early as possible at age 62 can be the right decision in some cases. But in others, it could be a costly mistake. Here's what you need to know.
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The biggest risk of claiming early
The earlier you file for Social Security, the less you'll receive each month. But it could end up being more costly than many people think.
By claiming at age 62, your benefit will be reduced by up to 30%. However, around half of U.S. adults incorrectly believe that once they reach their full retirement age (FRA), their benefit amount will increase, according to a 2023 survey from the Nationwide Retirement Institute.
In reality, your benefits are generally locked in for life once you start claiming (save for annual cost-of-living adjustments). If you file early, then, you'll receive smaller checks every month for the rest of your retirement.
While a 30% reduction may not seem significant, it adds up over time. In fact, researchers from United Income found that the average household misses out on around $111,000 worth of benefits over a lifetime by filing at the sub-optimal age.
Claiming at the right age for your situation is even more critical if your savings are falling short. Your benefit amount could be reduced by several hundred dollars per month by claiming at 62 compared to your FRA. If Social Security is going to be a significant source of income, those smaller checks could make retirement harder to afford.
When it pays to claim at 62
There are few hard-and-fast rules when it comes to retirement, so while claiming at 62 isn't the best move for some people, it could be a smart decision for others.
When you choose to begin claiming will depend on your priorities in retirement. Waiting until age 70 to file will earn you the largest possible payments, with a monthly boost of at least 24% on top of your full benefit amount. If your main goal is to maximize your monthly income, delaying Social Security may be wise.
On the other hand, if your biggest priority is to retire earlier and you have a healthy retirement fund (or are willing to make financial sacrifices), claiming early may not be a bad move. You'll still receive smaller checks, but sometimes that's a worthwhile trade-off for more time in retirement.
Finally, sometimes you may not have a choice in when you claim. If you're in your early 60s and lose your job or are unable to work, claiming early can help make ends meet. While it's possible to retire early and still delay benefits, filing early makes it easier to avoid draining your savings too quickly.
Weighing the pros and cons
Again, there's not necessarily a right or wrong time to take Social Security. The best decision for you will depend on your unique situation.
Financially, it often makes the most sense to delay Social Security past age 62 or even until age 70. But this is a major decision that involves more than strictly finances, so it's also important to look at the big picture before you start taking benefits.
Regardless of when you decide to file for Social Security, make sure you know how your age will affect your benefit amount. The more thought you put into this decision, the more prepared you'll be for retirement.
