Age 62 is a pretty big milestone in the context of Social Security. That's because it's the earliest age you can sign up to start receiving monthly benefits.
You won't get your full monthly benefit based on your individual work history if you claim Social Security at 62, though. To get your full monthly payday, you have to wait until full retirement age, or FRA, arrives. That age is either 66, 67, or somewhere in between, depending on your year of birth.
In fact, if you claim Social Security at age 62, you'll lock in a monthly benefit that could be up to 30% lower than your monthly benefit at FRA. And that could constitute a pretty big financial hit throughout your retirement. But if this one circumstance applies to you, then claiming Social Security at 62 is actually a pretty great idea.
Image source: Getty Images.
When you've earned the right to use your money to make your life better
Let's say you're approaching your 62nd birthday with a $90,000 nest egg. Unfortunately, that's not a whole lot of money to have in retirement savings at that stage of life. And in that case, filing for Social Security early and slashing your monthly benefit could mean ending up cash-strapped throughout your retirement.
But what if you're nearing age 62 with a $3 million nest egg -- one you sacrificed a lot to build? At that point, it could very much pay to claim Social Security early and use that money to enjoy your life.
It stands to reason, for example, that you might have more energy to travel at age 62 than at 67. So if you're sitting on a large pile of savings, why not claim Social Security early so you can take the trips you've always wanted to?
It may also be that by age 62, you're feeling burned out at work and really want to leave your stressful job behind. If claiming Social Security at 62 is what allows you to pursue a different job that's far less demanding, go for it.
You don't necessarily have to wait for FRA
Waiting until FRA or even beyond to claim Social Security makes sense when you expect to be heavily reliant on those benefits in retirement. In that case, a higher monthly benefit might really be essential. But if you've worked really hard to build up a large amount of savings, then it pays to claim those benefits at a time when they can improve your quality of life or make it possible to meet lifelong goals.
Of course, not everyone is in a position where they can afford to slash their Social Security benefits for life. Motley Fool research finds that across all U.S. households, the median retirement savings amount was just $87,000 as of 2022.
If you're a near-retiree with that amount saved, you probably shouldn't claim Social Security early. But if you have, say, 30 times that much money socked away for your senior years, then you shouldn't hesitate to claim Social Security at 62 if that move can better your life in one way or another.
