The No. 1 Reason to Claim Social Security at Age 62

If you know a little about Social Security, you may know that you can start collecting your benefits as early as age 62 and that you can delay starting to collect them for a long time. Thus, each of us has a decision to make at some point in our lives regarding when to start collecting Social Security.

Here's a look at several reasons to turn on the Social Security spigot early -- including the best reason to. I'll also offer a look at why you might actually want to put off collecting those benefits for a long time.

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Social Security basics

Let's set the stage first. Each of us has a "full retirement age" at which we can start collecting the full benefits to which we're entitled based on our earnings. (More specifically, benefits are calculated based on your earnings in the 35 years in which you earned the most.) Most of us have a full retirement age of 66 or 67. (It's 67 for those born in 1960 or later.)

If you start collecting your benefits early, your benefit checks will be smaller, but you'll collect more of them over your lifetime. Delaying beyond your full retirement age will beef up your benefit checks by about 8% for each year until age 70. The table below shows the percentage of your full benefits you'll receive at each starting age:

Source: Social Security Administration.

Reasons to claim your Social Security benefits at 62

Here are some reasons to claim your benefits early:

• It may be a wash: The Social Security system is designed so you'll get roughly the same in total benefits no matter when you start receiving your benefits if you live an average-length life.
• You want to spend money: Claiming early can deliver useful income that may help you afford to do some things you've wanted to do for a long time, such as travel abroad, buy a recreational vehicle, pay for a grandchild's tutoring, or pay down debt.
• You don't trust Social Security will be around later: Know that while Social Security is facing a shortfall in the coming years, it's projected that if nothing is done to strengthen the program (and there are multiple ways to fix it), beneficiaries will be collecting only 83% of their due within a decade. That's bad, but it's far from 0%.
• You're coordinating with your spouse: Married folks can enact various strategies with Social Security. One good one is this: Have the higher earner try to delay claiming until age 70, while the lower earner collects earlier. This provides some income early, while maximizing the other benefit -- so that when one spouse dies, the survivor will get to keep that maximized benefit.
• You're suddenly out of the work force, and until you can enroll in Medicare at age 65, you need to extra income to pay for health insurance. (The cost of healthcare is a big-ticket item in every retiree's budget.)

The best reason to claim your Social Security benefits at 62

The best reason to claim Social Security benefits early, such as at age 62, is this: You need the money.

You may need that income because you've been unexpectedly laid off or because you or your spouse is unable to work for health reasons. A 2022 Gallup poll found that while pre-retirees, on average, expected to retire at age 66, actual retirees had retired at age 61, on average. I've known many folks who got hit with a job loss and/or health setback and ended up retiring earlier than they had expected.

It's true that claiming your benefits early, such as at age 62, means you'll get significantly smaller checks, but you'll get more of them. A lot more. Imagine, for example, two 85 year olds, one who claimed benefits at age 62 and one who claimed at age 70. The first one will have received a total of 276 checks so far, while the second one will have received only 180.

If you live an average-length life, claiming early shouldn't hurt you too much. If you end up living to age 85 or 90 or beyond, delaying likely would have given you more in total benefits, but many people simply can't afford to wait.

But consider waiting until age 70 -- if you can

So while it can be perfectly reasonable to claim your benefits early, do give some thought to delaying, if you can. Here's why: A study conducted by online financial planning company United Income looked at the claiming decisions of about 20,000 retired workers using data from the University of Michigan's Health and Retirement Study. Researchers found:

• Only 4% of retirees make the financially optimal decision about when to claim Social Security
• About 57% of retirees would build more wealth through their life if they waited to claim until they were 70 years old (when only 4% of retirees currently claim)
• Only 6.5% of retirees would have more wealth if they claimed prior to turning 64 (when over 70% of retirees currently claim benefits)

In other words, most people are claiming early, and most people would be best off delaying until age 70. Note that "most" means 57%, not 95%. So plenty of people are not losing out by claiming earlier.

When to claim Social Security is a very big decision, and it can be stressful to make it on your own, so consider consulting a financial advisor. And be sure to plan for your retirement carefully, too, estimating how much income you'll need in retirement and how you'll get it.

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