Is It Ever a Good Idea to Claim Social Security at 62?

Key Points

• Filing for Social Security at 62 will typically result in a reduced monthly benefit for life.

• There are some scenarios where claiming benefits early makes sense.

• Run the numbers carefully before making your decision.

• The $23,760 Social Security bonus most retirees completely overlook ›

It's easy to see why the idea of claiming Social Security at 62 might appeal to you. Even though filing at that age will generally result in a permanent reduction to your monthly benefits, it's hard to say no to a monthly paycheck you could collect right away.

However, you should know that if your full retirement age is 67, which is the case if you were born in 1960 or later, then claiming Social Security at 62 will reduce your monthly benefits by about 30%. And that's a pretty large hit to your retirement income to accept for the rest of your life.

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It's for this reason that seniors are often advised not to claim Social Security at 62, despite the desire to have their money immediately. But is it ever a good idea to sign up for Social Security at 62? Absolutely.

Under the right circumstances, it can make a lot of sense. And here are a couple of scenarios where an early claim can be a smart bet.

When your health is poor

Claiming Social Security at 62 might reduce your benefits on a monthly basis. But an early filing won't automatically guarantee that you'll get less money in your lifetime. If your health is poor, and you therefore don't anticipate living a long life, then it could actually be a wise choice to claim Social Security at 62.

Let's say you're eligible for $1,800 a month in Social Security at age 67. If you sign up for benefits at 62, you'll only get $1,260 a month, which looks like a large hit at first.

But watch what happens if you only end up living until 73. Suddenly, those five extra years of payments do you a world of good, because in this example, claiming Social Security at 62 gives you a lifetime payout of $166,320. Waiting until 67 to claim Social Security gives you $129,600 -- a difference of $36,720.

When you've saved well and the money could buy you a lot of happiness

Claiming Social Security at 62 may indeed put less total income in your pocket if you end up living a fairly long life as a retiree. But an early filing might also bring you a world of joy you deserve to have.

The danger of claiming Social Security at 62 is shorting yourself on monthly checks and not being able to pay your bills as a result. But let's say you've saved enough money for retirement to be able to cover your living costs without Social Security, leaving those benefits to pay for extras.

If you claim Social Security at 62, you can use the money to travel or do other things that may require a certain level of health and mobility. If you wait five years to claim Social Security, you might lose out on those experiences. So in this situation, as long as you can afford the reduction to your monthly benefits, it could be a smart idea to claim Social Security at 62 for the happiness it brings you.

It's always wise to be cautious about claiming Social Security at 62. But that doesn't mean it's never a good idea. So don't assume that you're making a mistake by taking benefits at the earliest age possible. As long as you run the numbers and think through the decision carefully, it could end up working out quite well for you.

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