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

Key Points

• You can claim your Social Security retirement benefits as early as age 62.

• Those claiming early will get smaller checks, but more of them.

• Those claiming later will get bigger checks, but fewer of them. It might be worth it.

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

Each of us has a "full retirement age" at which we can start collecting the full Social Security benefits to which we're entitled based on our earnings. (Your 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.)

We can start collecting our benefits much earlier, though, beginning at age 62. Or we can delay doing so until age 70. Read on to see why you might want to claim early -- or late.

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Social Security 101

When you claim your benefits determines, to a great degree, how big or small they will be. Claim early and your benefit checks will be smaller -- but you'll collect many more of them. 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.

It might seem like waiting until age 70 is a no-brainer move, but remember that you'll get many fewer checks when you start late. The Social Security system is actually designed so that you get roughly the same total benefits no matter when you claim them -- assuming you live an average-length life. So let's consider some reasons to claim early or late.

Reasons to claim your Social Security benefits at 62

Here, then, are some reasons to claim your benefits early:

• It may be a wash: The Social Security system is designed so that 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 some debt.
• You don't trust that 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), within a decade, beneficiaries will be collecting only 83% of their due. 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 approach 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 when one spouse dies, the survivor will get to keep that maximized benefit.
• You're suddenly out of the work force: Until you can enroll in Medicare at age 65, you need 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

Why claim as early as you can? Well, the best reason to claim Social Security benefits early, such as at age 62, is this: Simply because you need the money. It's actually much more common to claim benefits early than late -- and that's in large part because many people simply need that income as soon as possible, perhaps due to an unexpected job loss or a health setback.

As noted above, it's not so bad to claim early, either, as you'll collect lots more checks than if you claim later -- ending up a wash for those who live average-length lives. Imagine two 85-year-olds, one who claims her benefits at age 62 and one who claims at age 70. The first one will receive a total of 276 checks -- by age 85 -- while the second one will receive only 180.

Why you might want to claim your Social Security benefits later

Still, claiming your Social Security benefits later might be better for you (if you're able to wait) -- because several studies have found that most (but not all) people will maximize their total benefits if they wait until age 70 to claim.

Think through your decision of when to claim carefully, coordinating with your spouse if you're married. You might even want to consult a financial advisor.

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