3 Reasons Not to Claim Social Security at 62

Source The Motley Fool

Key Points

  • Your starting benefit and future COLAs will be smaller if you claim Social Security at 62.

  • This means you'll be giving up inflation-protected guaranteed income.

  • Claiming Social Security benefits at 62 reduces your chance of maxing out your lifetime benefit.

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

You can claim your Social Security retirement benefits once you turn 62, and the Center for Retirement Research reports that this is the most popular age to start receiving payments.

But just because you can start your benefits at 62 does not mean you should start your benefits then. While it's tempting to begin collecting this income ASAP, there are major downsides. In fact, here are three big reasons that you could really come to regret such an early claim.

Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »

Adults standing in a field with backpacks and water bottles.

Image source: Getty Images.

1. You'll shrink your benefit significantly

Claiming Social Security at 62 has one obvious downside that should become apparent as soon as you look at your benefit amount. Because a claim at 62 is well before your full retirement age (67 if you were born in 1960 or later), you'll face five years of early filing penalties.

These penalties reduce your primary insurance amount (your standard benefit based on average wages) by five-ninths of 1% for the first 36 months and by five-twelfths of 1% for any additional month you claim early. The reduction amounts to a 30% cut in monthly benefits for a claim at 62 versus 67.

How much does this actually matter? A benefit that would have been $2,000 per month at 67 is reduced to just $1,400 per month at 62. That's $600 per month you lose because you decided not to wait.

2. You'll reduce a valuable source of inflation-adjusted income

When you claim your Social Security benefits at 62, you aren't just affecting your finances for the first year. Social Security benefits are protected against the impact of inflation. You receive a Social Security cost-of-living adjustment (COLA) in most years when the Consumer Price Index (CPI) shows increasing prices.

Unfortunately, because your COLA is awarded as a percentage, you will see smaller COLAs for the rest of your retirement if you start with a smaller check. To be clear, you will get the same percentage increase. But a 3% increase from $2,000 is an extra $60 per month, while a 3% increase from $1,400 is just $42 per month.

Seniors often do not have many (or any) other sources of income that provide guaranteed protection against inflation. Your savings and investments could lose buying power when prices surge. Shrinking a key source of income designed to hold its value and help support you for the rest of your life is a move you could really end up regretting.

3. You could reduce your lifetime Social Security benefits

Finally, claiming at 62 also reduces your odds of getting the most lifetime benefits.

Of course, you start getting payments sooner, and it is nice to have the money coming in. But multiple studies have shown that a later claim increases the chances of receiving more lifetime income, because most people live long enough that the higher checks earned from a delayed claim more than make up for any income missed.

You should consider these serious downsides of claiming Social Security at 62 as you plan for retirement before you move forward with a decision that may negatively affect your finances for the rest of your life.

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

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
WTI Price Forecast: Dips to $91.50 as Middle East jitters limit lossesWest Texas Intermediate (WTI) – the benchmark US Crude Oil price – attracts some sellers during the Asian session on Friday, snapping a two-day winning streak and stalling the previous day's recovery from the vicinity of a nearly four-week low.
Author  FXStreet
Oct 02, Fri
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – attracts some sellers during the Asian session on Friday, snapping a two-day winning streak and stalling the previous day's recovery from the vicinity of a nearly four-week low.
placeholder
Silver price forecast: XAG/USD rises to near $61.40 as US yields retreat, NFP eyedSilver price (XAG/USD) is up 0.55% to near $61.38 during the late Asian trading session on Friday. The white metal edges up as rally in United States (US) Treasury Yields has hit a pause.
Author  FXStreet
Oct 02, Fri
Silver price (XAG/USD) is up 0.55% to near $61.38 during the late Asian trading session on Friday. The white metal edges up as rally in United States (US) Treasury Yields has hit a pause.
placeholder
United States Dollar Index sits near March 2025 highs, above 102.00 ahead of US NFPThe US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, attracts buyers for the fifth straight day and climbs back above the 102.00 mark during the Asian session on Friday.
Author  FXStreet
Oct 02, Fri
The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, attracts buyers for the fifth straight day and climbs back above the 102.00 mark during the Asian session on Friday.
placeholder
US September Nonfarm Payrolls Preview: Job Growth May Cool, How Will US Stocks, Dollar and Gold React?On Friday, October 2 (EDT), the U.S. will release its September nonfarm payrolls report, with markets focusing on whether job growth can sustain August's rebound and whether the data will
Author  TradingKey
Oct 01, Thu
On Friday, October 2 (EDT), the U.S. will release its September nonfarm payrolls report, with markets focusing on whether job growth can sustain August's rebound and whether the data will
placeholder
Gold falls to near $4,150 as higher Treasury yields, oil prices outweigh softer PCE inflationGold price (XAU/USD) tumbles to near $4,150 during the early Asian session on Thursday, pressured by elevated US Treasury bond yields. Traders await the US September employment data for fresh impetus, which will be released later on Friday. 
Author  FXStreet
Oct 01, Thu
Gold price (XAU/USD) tumbles to near $4,150 during the early Asian session on Thursday, pressured by elevated US Treasury bond yields. Traders await the US September employment data for fresh impetus, which will be released later on Friday. 
goTop
quote