Social Security is a critical source of income for millions of retirees, and the age you begin taking benefits will have a huge effect on the amount you receive each month.
Many experts advise waiting until age 70 to file, as that will result in the largest possible payments. In fact, you'll collect your full benefit amount plus a bonus of at least 24% per month by filing at 70. If you claim as early as possible at 62, your benefit will be permanently slashed by up to 30%.
That said, claiming early isn't always a bad thing. In some situations, you could actually be better off filing as early as possible. While it's not the right move for everyone, there are three reasons you might want to file at 62.
Image source: Getty Images.
1. It could help you retire earlier
You don't have to begin claiming Social Security as soon as you retire, but it often makes sense financially. If you retire in your early 60s and then wait a few years to start taking benefits, you'll need to rely solely on your savings or other income sources -- which risks depleting your retirement fund too quickly.
If your goal is to retire as early as you can, claiming at 62 can help make that dream a reality. You'll still receive smaller payments each month, but if that's a sacrifice you're willing to make, claiming early can make early retirement more affordable.
2. Finances aren't everything in retirement
Financially, it often makes the most sense to take Social Security at 70. Delaying benefits will boost your monthly payments, which can be a lifeline if your savings are falling short.
But finances are only one part of the equation, and it's equally important to think about your priorities in retirement. Maybe you have dreams of traveling extensively, picking up new hobbies, or simply being able to keep up with the grandkids, for example.
If you plan on enjoying an active retirement, retiring and claiming benefits earlier in life may be more realistic than waiting until age 70. At the very least, it can give you more time to enjoy the activities you love while you're still younger and healthier.
3. You don't need to bet on your longevity
In theory, you should collect the same amount from Social Security over a lifetime regardless of when you file. By claiming early, you'll receive less per month, but more checks in total. Delay benefits, and you'll receive fewer payments, but each will be larger.
However, if you end up living a shorter-than-average lifespan, you could actually collect more in total by claiming early. To earn more over a lifetime by delaying benefits, most people will need to live well into their 80s or beyond.
This isn't the most pleasant topic to think about. But you're essentially betting on your longevity when you delay Social Security, and health issues can pop up quickly. If you wait until age 70 to claim and then develop health problems shortly after, you could regret not filing earlier.
When filing at 62 isn't the best move
There's no single correct answer when it comes to choosing what age to take Social Security. Filing early makes sense in some situations, but it won't be the right move for everyone.
If your main priority is to maximize your monthly income, delaying benefits is often the way to go. That 24% boost you'll receive by waiting until age 70 could amount to hundreds of dollars more per month. If you're going to be relying heavily on your benefits in retirement, that extra money can be life-changing.
Delaying benefits can also be smart if you plan to continue working later in life. If you continue working after claiming Social Security, it could result in benefit reductions (at least until you reach your full retirement age). If you expect to keep working late into your 60s, it often makes more sense to hold off on Social Security until age 70 or whenever you retire.
Social Security can go a long way in retirement, so it pays to choose your claiming age wisely. While filing at 62 will result in smaller payments each month, sometimes that's a worthwhile sacrifice to be able to retire earlier in life.
