3 Reasons to Claim Social Security at 62
Key Points
Filing for Social Security at 62 reduces your benefits for life.
If you have a specific reason for filing early, it's a decision that could pay off.
Consider your income needs and health when making your choice.
- The $23,760 Social Security bonus most retirees completely overlook ›
If you search the internet for Social Security claiming strategies, you'll probably see that many of them emphasize the dangers of filing for benefits at 62, which is the earliest age you can sign up. And there's a reason for that.
If you claim benefits at 62, your Social Security checks will be reduced by about 30% compared with what you'd get at 67, which is full retirement age for anyone born in 1960 or later. That's a pretty big hit.
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And remember, Social Security is a guaranteed income source. You're eligible for those monthly benefits for life. So shrinking them isn't a decision to take lightly.
But that doesn't mean filing early is a bad idea off the bat, either. Here are a few great reasons to claim Social Security at 62.
1. You need the money because you're out of work
Many people aim to keep working well into their 60s. But if you find yourself out of a job at 62, it could be difficult to get hired elsewhere. And if you don't have savings to live on, you may have to file for Social Security as early as possible to cover your costs.
This may not be an ideal situation. But does it beat using credit cards and loans to cover your expenses? Absolutely.
2. You don't expect to live very long
Here's something a lot of people don't know about Social Security. If you live an average lifespan, you'll generally end up with about the same lifetime total in benefits regardless of whether you file early or on time.
The math changes if you don't expect to live a long life, though. If you have health issues or parents who passed away in their 60s or early 70s, it could make sense to claim Social Security at 62. Even though you'll get less money each month, you may end up with a larger lifetime total in the event of a shorter lifespan.
3. You have to protect your portfolio during a market downturn
Retiring just as the stock market crashes is a nightmare scenario. But while you can delay retirement if the market tanks before you resign from your job, if a crash happens a few months after, you may be stuck.
At that point, claiming Social Security at 62 could allow you to leave more of your portfolio untouched during a down market, giving your assets an opportunity to recover. Depending on your expected lifespan, you can do the math to see if it pays to accept smaller benefits in exchange for portfolio preservation.
You'll often hear that claiming Social Security at 62 is a mistake. But that doesn't apply universally. It is important to have a good reason to take benefits as soon as you can. But as long as you have, in fact, thought things through, there's no reason to assume that filing at 62 won't work out for the best.
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