5 Reasons to Take Social Security Benefits at 62, and 6 Reasons to Wait

The age-old debate about when to start Social Security continues with strong arguments on both sides. Some people plan to sign up as soon as they're eligible at 62 while others are holding out for the largest possible checks at 70. And still others are planning on taking their benefits at their full retirement age (FRA) -- 66 or 67 for today's workers -- as a sort of middle ground.

The right starting age for you depends on your personal and financial situation. To help you decide, let's explore some of the common arguments for and against starting benefits early.

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The main argument in favor of delaying Social Security benefits is that you'll get more money per check. Every month you claim benefits before your FRA reduces your checks, so if you begin right away at 62, you'll only get 70% of your scheduled benefit per check if your FRA is 67 or 75% if your FRA is 66. Delaying benefits increases your checks until you reach the maximum benefit at age 70 -- 124% of your scheduled benefit per check if your FRA is 67 or 132% if your FRA is 66.

Of course, delaying benefits means fewer checks, but because you're getting more per check, you could end up with more money overall if you live long enough. If you're trying to get the most money possible and you think you'll live into your late 80s or beyond, delaying benefits is usually the smarter play.

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Delaying benefits might not earn you more money over your lifetime if you have a health condition that shortens your life expectancy. It's possible you could end up with no Social Security benefits at all if you delay claiming too long and die before signing up.

Starting early is a better choice if you're concerned about this. Signing up right away at 62 will give you time to get as much out of the program as possible for yourself and your family before you die.

Your Social Security benefit is based on your average monthly income over your 35 highest-earning years, adjusted for inflation. If you haven't yet worked 35 years, the Social Security Administration will include zero-income years in your calculation. This will bring down your benefit at all ages.

Working at least 35 years will help you avoid this benefit reduction, and working even longer could increase your benefit because your lower-earning years are replaced by your higher-earning years. Typically, most people make more money later on in their careers, so spending an extra year or two in the workforce before retiring could net you larger Social Security benefits for the rest of your life.

Retirement isn't always a choice. Some people are forced to retire earlier than they'd planned due to an illness, an injury, a job loss, or caring for a sick family member. If they don't have adequate savings, starting Social Security early may be the only way these individuals can pay their bills without going into debt.

If you feel you can delay benefits for a little while, doing so can still be a smart idea. Every month you delay benefits permanently increases your checks, so even waiting a month to start benefits means more money for you in the long run.

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Your spouse may be eligible for a Social Security benefit of up to half of your benefit at your FRA if this amount is larger than what your spouse would be entitled to based on their own work record. But if you choose to start benefits early, the Social Security Administration will also reduce your spouse's benefit, which is tied to yours.

This compounds the reduction of benefits over your lifetime, and it could cost you and your spouse tens or even hundreds of thousands of dollars.

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If you're the lower-earning spouse, it could make sense to start Social Security benefits before your FRA or as early as 62 if doing so will enable your spouse to delay their Social Security benefits to age 70. At this point, they'll be eligible for their largest possible Social Security benefit and the Social Security Administration will automatically switch you over to a spousal benefit if this would give you more money than you're getting based on your own work record.

But it might not make sense for you to start early if your spouse can afford to delay benefits until 70 without you claiming Social Security. You can wait to claim Social Security until your FRA or until you turn 70, at which point you might be eligible for a larger benefit than the spousal benefit you'd get based on your significant other's work record.

The Social Security Earnings Test reduces the benefits of individuals who are claiming Social Security under their FRA and earning over a certain amount each year. In 2020, the government will withhold $1 for every $2 you earn over $18,240 if you're below your FRA for the entire year. If you'll reach your FRA in 2020, it will only withhold $1 for every $3 you earn over $48,600 if you reach this amount before your birthday. Once you reach your FRA, the Earnings Test goes away, and you can earn as much money as you'd like and still receive your full Social Security benefit.

The good news for those who see their benefits reduced is that that money isn't gone forever. Once you reach your FRA, the government recalculates your benefits to account for the money it withheld, and your future checks will be a little larger.

If you claim Social Security and you have minor children or children who were disabled before 22 whom you are legally responsible for still living in your household, these children may be eligible for Social Security benefits as well. This could bring even more money into your household, at least for a few years. Your living expenses are likely higher with children in your home than they will be once they move out, so the extra money could be welcome, even if it doesn't last forever.

Delaying benefits could deprive your family of these child benefits because once your child has graduated high school, they are no longer eligible for Social Security benefits on your work record unless they became disabled before 22.

You could owe taxes on your Social Security benefits if you're earning too much in a year. You could be at a greater risk of this if you're working and claiming Social Security at the same time. Individuals with combined incomes -- adjusted gross income (AGI) plus nontaxable interest and half of your Social Security benefits -- of $25,000 or more and married couples with combined incomes of $32,000 or more could owe taxes on up to 50% of their benefits. Individuals with combined incomes exceeding $34,000 and married couples with combined incomes exceeding $44,000 could owe taxes on up to 85% of their benefits. And that doesn't count any additional Social Security benefit taxes imposed by your state.

Starting at 62 just for the sake of claiming benefits while you're still working could cause you to lose a substantial portion of your Social Security benefits back to the government as taxes whereas waiting to claim Social Security until you're retired and your income is lower could help you hold onto more of your money.

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It's no secret that Social Security's trust funds are close to being depleted, and the pandemic and resulting recession will likely only speed that up. If the government doesn't make changes to the program, it's possible Social Security recipients could see a 26% benefit cut, maybe even before the end of the decade, which raises the question of how you should handle that.

Some people think they should claim early so they can get as much money as possible from Social Security before benefits get cut. But on the other hand, one thing that's definitely not going to change is that delaying benefits brings you larger checks than you'd get if you started early. So even if there is a cut, your post-benefit-cut checks will still be larger if you delay benefits than they would be if you started early. There isn't a clear-cut answer on which is the better approach here, so that's something you have to weigh and decide for yourself.

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When you start Social Security is ultimately your choice, and while the factors discussed here may play a part in what you decide, you just have to go with your gut in the end. You might think that starting early or delaying benefits makes the most sense for you right now, but there's no way of knowing how your life or Social Security is going to change in the coming decades, so you can never be completely sure that you made the right choice.

The best you can do is weigh all of your options and check in with yourself every few years and on the eve of your retirement to make sure you're still satisfied with your decision.

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