There's no single, uniform age to sign up for Social Security. Rather, seniors get a choice in that regard.
You're entitled to your complete monthly benefit based on your personal income history once full retirement age (FRA) arrives. That age is 66, 67, or somewhere in between, depending on the year you were born.
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However, you can sign up to collect Social Security as early as age 62. And while your monthly benefits get reduced for each month you claim them ahead of FRA, signing up at age 62 could mean getting your hands on that money a lot sooner.
You'll often hear that claiming Social Security at age 62 is a risky move since it means slashing an otherwise guaranteed income stream for life. And that makes sense.
If you enter retirement with a $1 million 401(k) or IRA, there's no saying that money won't eventually run out on you. But if you lock in a higher monthly Social Security benefit by waiting to file, you should be in line to collect that benefit as long as you live.
However, there's one scenario where claiming Social Security at 62 makes a world of financial sense. So don't automatically assume that taking benefits as early as possible is a poor choice.
When an early filing leads to more lifetime income
Social Security is pretty much designed to pay you the same amount of lifetime income regardless of when you file for benefits. The logic is that claiming Social Security early will reduce your benefits, but you'll collect those benefits for a longer period of time so that everything works out in the end.
But that assumes you'll end up living an average lifespan. And if you have reason to believe you won't live very long, then claiming Social Security as early as possible is a move to strongly consider.
Of course, you can't predict your own lifespan -- that's impossible. But one thing you can do is use your health as an indication of how long you might live. If your health is poor at age 62, then claiming Social Security at that time could be a smart move.
Here's how that decision might play out in terms of actual numbers. Let's assume you'd get $2,000 a month in Social Security at an FRA of 67, but you file at 62 instead and reduce your benefits to $1,400 a month. If you live until age 78 1/2, you'll pretty much break even -- you'll walk away with roughly the same amount of total Social Security income whether you file at 62 versus 67.
However, watch what happens if you only live until age 73. In that case, filing for Social Security at 62 results in almost $41,000 more in lifetime income from the program. And if you only live until 72, you'll come out ahead by $48,000 in your lifetime by virtue of claiming benefits as early as possible.
You have to do what makes sense for you
There are plenty of warnings out there telling people not to sign up for Social Security at age 62. But the reality is that your situation may be different from that of the typical beneficiary. So, rather than follow some blanket advice, think about your health and what's best for you. You may find that claiming Social Security at 62 is a move that really pays off.
