Claiming Social Security at 62 Sounds Tempting -- but Here's What It Could Really Cost You

There's a reason 62 is such a popular age to sign up for Social Security. It's the earliest age you can file. And when you're being offered a lump sum of money every month, it can be hard to sit back and say, "No, thanks, I'm willing to wait."

Of course, there's an upside to waiting. With Social Security, you get your monthly benefits in full once full retirement age arrives. That happens at 67 if you were born in 1960 or later. And if you sit tight beyond that point, you can boost your benefits by 8% for each year you wait to file past full retirement age, up until you turn 70.

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Still, waiting to start collecting monthly benefits when they're available sooner is hard. You may be willing to accept smaller checks if you can get that money ASAP. But here's why filing at 62 could end up costing you more than you think.

Smaller COLAs

If you claim Social Security at 62, you won't just be looking at smaller monthly benefits. Your annual cost-of-living adjustments, or COLAs, will be smaller as well.

You might assume that's not such a big deal. But one thing to remember is that Social Security may be the only source of retirement income you have access to that's protected against inflation.

Your savings could, in theory, have inflation protection with the right investments. But then you're taking on market risk.

Social Security COLAs offer inflation protection without any risk. The less money you get each month, the less that protection will be worth.

Smaller survival benefits

If you're the higher earner in your household and your spouse outlives you, they'll generally be entitled to survivor benefits equal to your monthly benefit. If you slash that benefit by claiming Social Security at 62, your spouse will have that much less guaranteed monthly income for life.

Now if you have a huge pile of retirement savings, that may not be a big deal. If you're leaving your spouse with $3.5 million in their 80s, that's probably enough to cover their bills even on smaller Social Security checks.

But if your savings are more average or below average, larger survivor benefits could be extremely important. If your spouse ages without you, they may eventually have to pay for long-term care if there's no one around to tend to their needs. The cost there could be astronomical -- enough to drain an otherwise reasonably healthy IRA or 401(k).

In a situation like that, claiming Social Security at 62 versus 67 or 70 could spell the difference between your surviving spouse comfortably covering the cost of care versus having to cut corners or potentially burden a grown child of yours.

Smaller lifetime benefits

When you think about claiming Social Security at 62, don't just consider how much money you'll lose each month. Rather, think about what it'll mean on a lifetime basis. The number may be larger than you'd expect.

Say you're entitled to $2,000 a month in Social Security at 67. If you file at 67 and live until 92, you'll end up with about $115,000 more in lifetime Social Security income compared to taking benefits at 62.

Now, think about what that much money might do for you over several decades. It could cover many home repairs and improvements, buy a new car when yours bites the dust, and fund travel and other enjoyable activities for your golden years. That's a lot to give up.

Make your decision carefully

There are a lot of factors that should go into your Social Security filing decision -- your savings level, your income needs, and your life expectancy (which you of course can't predict with certainty but can try to ballpark based on your health). It's important to consider all of these before claiming Social Security at 62.

You may love the idea of getting your money sooner. But slashing your monthly checks could mean not meeting your retirement goals and having a harder time covering your costs. It could also mean shorting yourself on lifetime income, shorting your spouse on survivor benefits, and getting less inflation protection for many years.

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