There's no such thing as a right age or wrong age to claim Social Security. Rather, your filing decision should hinge on a variety of factors that are personal to you.
Now you're allowed to sign up for Social Security as early as age 62. But if you don't wait until full retirement age to file, which is 66, 67, or somewhere in the middle, depending on your year of birth, then your monthly benefit will be slashed on a permanent basis.
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Generally speaking, it can be a good idea to wait until full retirement age or even beyond to claim Social Security rather than file early when you're low on retirement savings. The logic is that if your nest egg won't provide all that much ongoing income, you may want to compensate with a larger monthly payday from Social Security. But if these situations apply to you, then an early Social Security claim could make sense even if your nest egg isn't robust at all.
1. Your health is poor
Claiming Social Security early will reduce your benefits on a monthly basis. But it won't necessarily reduce them on a lifetime basis. In fact, if your health is poor and you're unlikely to live a long life, you might come out ahead financially by signing up for Social Security as soon as you're able to.
As an example, say you're entitled to an $1,800 monthly Social Security benefit at age 67, only you file at 62 instead. Doing so will give you $1,260 a month, or $540 less. But if you only live until 74, filing at 62 will give you about $30,000 more in lifetime Social Security income.
2. Your job is harming your health
Maybe your health is in decent shape now -- but it won't be if you continue to stay at your job. No amount of money is worth putting your health at risk. If you're in a truly bad situation at work, it could very much pay to claim Social Security early, even if that means accepting a reduced monthly benefit for life.
From there, you could always try to pursue part-time work or something that won't be a detrimental to your physical or mental wellbeing. And you may even find that you're able to work longer overall by switching jobs. However, if you're going to work while collecting Social Security following an early filing, you will need to be mindful of the earnings-test limits.
3. You want to start a business
You may have more energy and drive to get a small business off the ground in your early 60s than later in life. So if claiming Social Security early is your ticket to kicking that venture off, then it may be worth the hit to your monthly benefit.
Imagine your business ends up being lucrative enough to supply you with steady income throughout retirement. That income might more than make up for the reduction in benefits you face. Plus, there's also the personal fulfillment of running a successful operation to factor in.
Claiming Social Security early isn't the right decision for everyone. But if these situations apply to you, you may find that filing early is a move you don't end up regretting one bit.
