Determining at what age to begin taking Social Security is an incredibly important decision, as it will affect your monthly income for the rest of your life. You can file for benefits as early as age 62, and that's the most popular time to claim. Around 35% of men and nearly 40% of women claim at this age, according to a 2020 report from the Bipartisan Policy Center.
In some cases, claiming as early as possible is a fantastic decision. But it won't be the right move for everyone, and there are times it could wreak havoc on your retirement. Here's how to tell whether it's the right decision for you.
When it pays to claim early
Filing for Social Security at 62 can be a smart idea in a few situations. If you have a robust retirement fund and don't necessarily need the extra cash, for instance, it may be worthwhile to claim early.
If you begin taking benefits at 62, your payments will be permanently reduced by up to 30%. But if you have plenty of savings to make ends meet in retirement (or if you're willing to make financial sacrifices), those smaller checks may not be a deal-breaker.
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Claiming early can also make it easier to retire earlier. You don't necessarily have to start taking benefits as soon as you retire, but if you retire in your early 60s and delay Social Security, you'll need to rely on your savings or other sources of income for at least a few years -- which risks draining your retirement fund too quickly.
If you're eager to retire earlier, claiming at 62 could make that more affordable. This can be especially important to those who are battling health issues or have reason to believe they won't live well into their 70s or beyond. While claiming at 62 will result in smaller monthly payments, if you end up living a shorter-than-average life, you could actually collect more in total by filing early.
When it's a better idea to wait
Perhaps the biggest downside to claiming early is that it could potentially spell major trouble for your finances -- especially if your savings are lacking. The average retired worker collects around $1,800 per month from Social Security, as of October 2023. If you have a full retirement age of 67 years old, claiming at 62 would reduce your benefits by 30% -- leaving you with $1,260 per month.
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On the other hand, if you were to delay claiming until age 70, you'd receive your full benefit amount plus an extra 24%, or $2,232 per month. That's a difference of $972 per month, compared to filing at 62. This can be life-changing if your savings are falling short.
Another factor to consider is that Social Security is facing some major challenges that could affect your income. Benefits have already lost around 40% of their buying power since 2000, according to a report from The Senior Citizens League, and the problem could worsen in the coming decades if Social Security continues struggling with inflation.
Also, with the trust funds quickly being depleted, benefits could potentially be cut by around 20% by 2034. There's still a chance Congress will find a solution before then to avoid cuts. But if Social Security is going to be a significant source of income for you, it could be risky to bet your retirement on lawmakers solving the problem.
While it's unclear whether benefit cuts will actually happen or whether Social Security will continue losing buying power, delaying claiming could help protect your retirement. If you claim early and then benefits are slashed, it could make retirement even harder to afford.
What's the right move for you?
Whether you choose to claim Social Security at 62 or wait a few years will depend primarily on your priorities in retirement. If your main goal is to retire as early as possible (even if it means collecting smaller checks each month), filing at 62 may be your best bet. However, if your savings are falling short or you're worried about how Social Security's challenges may affect your income, the benefit boost you'll receive by delaying could make it worthwhile to wait.
There's not necessarily a right or wrong time to take Social Security, as it will depend on your unique situation. But by weighing the pros and cons of claiming at 62, it will be easier to decide whether it's the right move for you and your retirement.
