Social Security is an important source of money for most retirees. That's the point, as the system was set up to ensure retirees had a basic level of income on which to live. The dilemma you face is deciding when to start claiming Social Security. Here's the big reason to claim early.
When can you claim Social Security?
You pay into the Social Security system all of your working life. And when you stop working, you can start claiming the entitlement. The system is set up so you have a retirement age that varies based on when you were born. Some people will have a full retirement age of 65, while others will end up at 67. That is when you get your full benefit.
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However, you can claim as early as age 62 or wait until age 70. (Technically, you don't have to claim Social Security at all, if you don't want to.) If you claim early, your benefits are reduced for life. If you claim late, your benefits are higher for life. From a pure dollars-and-cents view, the right decision is to wait until 70 so you maximize your Social Security check.
The reason why people claim at 62
That said, there's a spike in claims at 62. In fact, more people claim at 62 than at any other age. This actually makes sense in one very important way: Nobody knows when they will die.
If you wait until 70 to claim Social Security, you are gambling that you will not only live to age 70 but also well beyond that age, as well. If you have significant retirement savings, that may not be a big deal for you, as you can live off of your savings until you claim. However, if you don't have material retirement savings, delaying would likely require you to continue working. But you have to consider what you are giving up by not claiming: the opportunity to stop working. You could enjoy that time doing things you love instead of earning an income so you can delay collecting Social Security.
Life is what happens while you are busy doing other things
The average life expectancy in the United States is around 78. On average, claiming Social Security early means enjoying a work-free life for 16 years. Every year you wait to claim cuts that number down. Since we don't know when we may die, claiming Social Security early is the best way to maximize the time you have to enjoy retirement, even if it isn't the best way to maximize your Social Security check.
