Even though I’m not close to ending my career, as someone who writes about retirement all the time, I like to contemplate different financial scenarios. I’ve spent hours thinking about what investing strategy I want to uphold in retirement, what withdrawal rate I might use for my savings, and when to claim Social Security.
I’ve actually flip-flopped on the latter quite a lot. I used to think that claiming Social Security at the earliest possible age of 62 was a terrible idea. For a while, I was convinced that filing for benefits at 70 made the most sense, since that’s when you can lock in the largest monthly benefit possible.
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But these days, I’m more inclined to consider filing for benefits at 62 than at 70. I also think it’s a move that could make sense for a lot of people.
Why claiming Social Security at 62 could pay off
To understand the potential issue of claiming Social Security at 62, we’ll need to do some math. You’re eligible for your monthly Social Security checks without a reduction at full retirement age, which is 67 if you were born in or after 1960.
If you file for Social Security at 62, you’ll be looking at a roughly 30% decrease in your monthly checks compared to full retirement age. So if your full retirement age benefit is $2,000, filing at 62 gives you $1,400 a month instead.
However, for each year you delay Social Security beyond full retirement age, your monthly benefits grow 8%. So a $2,000 benefit at 67 becomes $2,480 at 70, which is when you stop getting credit for a delayed filing.
If you end up living a long or even average lifespan, you could lose out financially by claiming Social Security at 62 rather than waiting. But if you don’t end up living beyond a certain point in your 70s, the numbers change.
At 78, for example, you’ll have a total of $268,800 in Social Security if you file for benefits at 62, assuming our baseline $2,000 benefit above. If you file at 67, at age 78, you’ll have just $264,000, and if you file at 70, you’ll have a lifetime total of $238,080.
What really changes the math on claiming Social Security early is not having health and longevity on your side. Filing for benefits at 62 could sting financially if you end up living until your 80s or 90s. But if you don’t, signing up for benefits as early as possible starts to make a ton of sense from a financial standpoint.
Without a crystal ball, you don’t know what’s in store for your health or how long you’ll live. But if you already have medical problems in your early 60s and your parents didn’t live past their 70s, you may be better off claiming Social Security as soon as you can.
Getting the money sooner could do you a world of good
The other argument for claiming Social Security at 62 is one that resonates with me a lot. Even if you’re expecting to live until your 80s or 90s, your 60s may be your best retirement decade in terms of health and mobility. The sooner you file for Social Security, the more likely you may be to use your benefits to achieve lifelong goals that require you to be in good physical shape.
As an avid hiker, I hope to be scaling mountains and navigating 10-mile trails during retirement. Will I be able to? That’s anyone’s guess.
But for that reason, I don’t know that I’d want to put off Social Security. If I can use those benefits to go places I haven’t been, it may be worth the 30% hit to my monthly checks compared to waiting until full retirement age.
As a caveat, I’m saying this as someone who’s already built up quite a bit of retirement savings. I’m not expecting Social Security to be my only retirement income stream. If that were the case, I don’t think filing at 62 would be an option.
But if you have income outside of Social Security and can afford the reduced checks that come with an early claim, you may want to file at 62 if that allows you to do the things you’ve always wanted.
Don’t assume you’re making a mistake
It’s easy to get caught up in the narrative that filing for Social Security at 62 is an unwise move. But it could end up being a sound financial decision.
Even if claiming benefits as early as possible results in less lifetime Social Security income, it could result in memorable experiences you may not get to have later. So if you’re on solid ground as far as your savings go, it could pay to file for benefits at 62, despite potentially ending up with less money.
