One of the most significant financial decisions you might make in your lifetime is when to file for Social Security. In that regard, your options begin once you turn 62 and generally last indefinitely from that point onward.
There's no such thing as a "final age" to claim Social Security. However, you're eligible for your complete monthly benefit, based on your personal income history, once full retirement age (FRA) arrives. That age is either 66, 67, or somewhere in the middle, depending on your year of birth.
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You can also opt to delay your Social Security claim beyond FRA. And for each year you do, your monthly benefit will get a permanent 8% boost. Once you turn 70, though, there's no financial incentive to delay your Social Security filing, so 70 is often regarded as the latest age to claim benefits, even though you can file at 75, 83, or 94 should you so choose.
Still, you may be more interested in claiming Social Security at the earliest possible age of 62. But before you do, keep these important points in mind.
1. You'll be slashing your monthly benefit for life
Many people are aware that claiming Social Security at age 62 means accepting a reduced monthly benefit for the remainder of their retirement. But what you may not realize is just how strong a financial impact that could have on your life.
In time, the savings you bring into retirement could run out, leaving you increasingly reliant on Social Security as you get older. And if you reach the point where you're no longer getting income from your 401(k) or IRA at all, then a smaller monthly Social Security benefit suddenly would become hugely problematic, even if it wasn't a problem initially.
2. You may have benefits withheld if you work while collecting them
Social Security allows seniors to work and receive monthly benefits at the same time. And once you reach FRA, you can earn any amount of money from a job without losing any of your monthly benefits. But if you work and collect Social Security prior to reaching FRA, you'll be subject to an earnings-test limit, the amount of which can change from one year to the next.
This year, for example, the earnings-test limit is $22,320. Beyond that point, you risk having $1 in Social Security withheld per $2 of income. To be clear, those withheld benefits (which are paid back to you later on) are on top of the reduced benefit you lock in by filing for Social Security ahead of FRA.
The earnings-test limit is more generous in 2024 for those reaching FRA. In that case, it's $59,520, and earnings beyond that point will leave you with $1 in Social Security withheld per $3 of earnings. Either way, it's important to understand that when you get benefits before FRA, your monthly Social Security checks might shrink if you earn too much.
3. You stand to reduce survivors benefits for your spouse
The amount of money you receive from Social Security each month has the potential to impact your spouse. Not only might you share your monthly benefits while you're alive, but once you pass, your spouse will be entitled to survivors benefits from Social Security. And those monthly payments will be the equivalent of what you collected while you were alive.
If you sign up for Social Security at age 62, you'll not only reduce your own monthly benefit, but also, reduce the amount your surviving spouse is able to collect each month. If you're a lot older than your spouse, you may want to rethink the idea of filing for Social Security at 62 unless you know they've got a huge amount of savings or are entitled to a large monthly Social Security benefit of their own, based on their lifetime wages.
All told, filing for Social Security at 62 carries a lot of weight. It may seem like an easy ticket to early retirement at first, but when you take a deeper dive into the consequences, you may conclude that waiting until FRA or beyond to sign up is really a better choice.
