When it comes to claiming Social Security, you get choices. You're allowed to file for benefits once you turn 62, but you won't get your full monthly benefit based on your personal income history until full retirement age, or FRA.
Your FRA depends on your year of birth. It's either 66, 67, or somewhere in between. You can also delay your Social Security filing past FRA for a boosted monthly benefit for life (though at age 70, that incentive runs out). By contrast, if you claim Social Security at 62, your monthly benefit could end up being up to 30% lower than what it would be at FRA.
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Because of that, I was convinced that claiming Social Security at age 62 was a mistake. But now, I feel very differently.
Not everyone lacks retirement savings
A big reason I used to think filing for Social Security at 62 was a poor choice is that many Americans sorely lack retirement savings. Motley Fool research shows that as of 2022, the median retirement savings among seniors aged 65 to 74 was just $200,000.
At an annual withdrawal rate of 4%, which experts have long recommended, that's just $8,000 a year in retirement income from personal savings. So someone with a savings balance of around $200,000 could get hurt financially by claiming Social Security early.
However, not everyone is in that same lack-of-savings boat. There are plenty of people who have a few million dollars saved for retirement, and people in that situation should absolutely not hesitate to claim Social Security early if it helps them meet lifelong goals or leads to a better quality of life. They've earned it.
Health should be a factor, too
It's not just seniors with large nest eggs who may be well-served claiming Social Security at 62. People with health issues might benefit financially by filing early, as well. That's because an early claim could result in a higher amount of lifetime income from Social Security.
Take someone with a $1,600 monthly benefit at an FRA of 67. Filing at age 62 means slashing that benefit to $1,120. But if that same person only lives until age 74, they'll come out ahead financially to the tune of almost $27,000 in lifetime income by claiming Social Security at 62 instead of waiting for FRA.
It's a matter of what's best for you
You'll often hear that certain ages are the "right" or "wrong" ones for claiming Social Security. In reality, you need to consider your personal circumstances when deciding what's right versus wrong for you.
You may come to the conclusion that you shouldn't sign up for Social Security at the earliest age possible. But that doesn't make it a universally poor choice.
I'm nowhere close to having landed on a Social Security filing age, but I'm no longer writing off the idea of claiming benefits at 62. And it's something you may want to be open to, as well.
