When seniors decide to apply for Social Security as soon as they turn 62, they're usually focused on what they're getting by doing so -- a monthly benefit, help with their bills, maybe enough extra income that they can finally retire. All of those things can be true, but they're not the whole story.
Claiming Social Security at 62 has some major drawbacks, too. Make sure you're comfortable with giving up the following three things before you decide to apply as early as possible.
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1. Larger monthly benefits
Claiming Social Security benefits at 62 shrinks your checks by 30% compared to signing up at your full retirement age (FRA), which is 67 for most people. This loss is generally permanent.
Every month you delay Social Security increases your benefits by anywhere from 5/12 of 1% per month to 2/3 of 1% per month until you qualify for your largest checks at 70. Some people prefer to wait longer to sign up so that their checks will cover a larger percentage of their monthly expenses in the future.
2. A larger lifetime benefit
Your lifetime benefit depends on the size of your checks and how long you claim them for. Applying early means more years of benefits, but each check is smaller. Delaying gives you larger checks, but fewer of them. Which claiming age gives you the largest lifetime benefit depends on your life expectancy.
If you expect to live to an average or above-average life expectancy, there's a good chance you get your biggest lifetime benefit by delaying your Social Security application until your FRA or beyond. Not everyone can afford to do this, but if you can, it might be a smarter play than settling for smaller checks over a longer period.
3. Larger survivor benefits for your family
The size of the retirement benefit you're receiving or qualify for at the time of your death determines the survivor benefits your loved ones receive after you've passed away. By claiming Social Security early, you're not just reducing your own checks. You're also reducing what your family will receive from the program in the future. That could be a problem if you expect them to be heavily dependent on these benefits.
This isn't to say that claiming Social Security early is always the wrong choice. It can make sense for some people. Just make sure you think through all of your options before you apply, and weigh the trade-offs of each claiming age.
