Social Security at 62: Smart Move or Costly Mistake?

There's a reason so many Americans look forward to turning 62 -- it's the earliest age you can sign up for Social Security. And while filing for benefits at 62 will reduce them in the process, after years of paying into the system, you may be more than ready to start getting that money.

But is claiming Social Security at 62 a smart move? Or is it a mistake you might sorely regret? The answer depends on you.

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When claiming Social Security early makes sense

For some people, claiming Social Security early means getting to retire early. For others, it means getting to enjoy that money at a time in life when it can do more for you, such as enable you to travel or start a business you're passionate about.

Claiming Social Security early could make a lot of sense if you have no choice -- say, you've lost your job and don't have other income, or you're unable to keep working for health reasons.

It could also make sense if your health is poor and you don't expect to live a long life. Despite the smaller monthly payments that come with filing at 62, getting more of them could mean scoring a larger lifetime payday from Social Security.

Filing for Social Security early is also a lot less risky when you have a nice amount of savings to supplement those benefits. A $3 million IRA or 401(k), for example, could easily be giving you well over $100,000 in retirement income. At that point, you may be willing to accept less money from Social Security each month so you can get your benefits sooner and use them in a meaningful way.

Finally, claiming Social Security early could, in some cases, be a way to preserve your savings. Imagine you retire just as the stock market tanks. Pulling from your portfolio could mean locking in losses that limit your withdrawals in future years. Claiming Social Security at 62 could make it possible to leave your nest egg untapped and ride out a downturn with less stress.

When claiming Social Security early becomes a problem

Reducing a guaranteed source of retirement income for life is a move you have to consider carefully. If you don't have very much in the way of retirement savings, taking benefits early could mean being short on income for many, many years.

Also, if you have a family history of longevity, claiming Social Security early could mean limiting yourself to a smaller lifetime benefit as compared to waiting until full retirement age to file or beyond.

Plus, if you're married and expect your spouse to outlive you, filing for Social Security early could mean leaving your life partner with a smaller survivor benefit. That may not matter so much if you have a multi-million-dollar IRA or 401(k). But it might matter a lot if your savings are more modest and you'd expect your spouse to rely heavily on Social Security in your absence.

Making the right call

A lot of people will say that claiming Social Security at 62 is a silly choice because it automatically reduces those benefits on a monthly basis. It's important to recognize that 62 should not necessarily be written off as your Social Security filing age if you have reasons for taking benefits early and can afford the reduced payments.

Ultimately, you'll need to think about your personal circumstances to see if filing for Social Security at 62 is the right choice. And if you decide that it isn't despite wanting to file at 62, your reward will be larger monthly checks, which isn't too raw a deal.

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