The decision on when to claim Social Security benefits is one of the most important choices you'll make for your retirement. The age at which you claim benefits affects how much income you'll receive from Social Security each month. It also can impact the spousal benefits and survivor's benefits available to your husband or wife.
The goal for most retirees is to get the maximum in benefits over their lifetimes while making sure Social Security provides money necessary to enjoy their golden years. If that's your aim when deciding when to apply for Social Security benefits, you'll have to consider carefully whether claiming at 62 makes sense for you.
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What to know about claiming Social Security at 62
Before you claim Social Security benefits at 62, be aware that doing so will permanently reduce your monthly income. That's because 62 is earlier than full retirement age (FRA).
FRA varies based on when you were born, but for those born after 1960, it's age 67. When you retire before FRA, your monthly Social Security benefit is reduced by five-ninths of 1% for the first 36 months and by five-twelfths of 1% for each month before 36 months.
That means your benefit could be reduced by up to 30% if you've claimed at 62 when FRA was 67. Your benefit doesn't jump to your standard benefit later -- you'll receive permanently reduced benefits the rest of your life and your cost of living adjustments (COLA) will be based on the smaller monthly benefit you start with.
Pros of claiming Social Security at 62
There are some big benefits of claiming Social Security at 62, despite the downside of having your benefits reduced:
- You'll be able to enjoy your income while you're still young and healthy: Health issues may prevent you from doing things much later in retirement, so you may prefer to start claiming benefits early -- even if that means you'll have less money coming in.
- You can support yourself if you're forced out of the workforce early: If you can't earn a living in your mid-to-late 60s, claiming Social Security at 62 can keep you from spending these years in poverty.
- You won't have to worry about living long enough to break even: While it's true you'll receive larger benefits if you delay claiming Social Security, you'll have to go years without benefits. It takes time for your higher monthly benefit to make up for the years when you received nothing. In fact, for most people, it takes more than a decade to break even from delaying benefits. There's no guarantee you'll live long enough, so it may make sense to get Social Security income while you can.
- Claiming benefits at 62 may make early retirement possible: If you wouldn't be able to retire early unless you claimed Social Security, you may decide getting out of the workforce early is worth accepting reduced Social Security income.
With so many good reasons to claim Social Security at 62, there's definitely an argument to be made that this could be the right choice.
Cons of claiming Social Security at 62
It's also important to consider the downsides of claiming benefits as soon as you're able to instead of delaying. Some of these downsides include:
- Your monthly income will be smaller: This is an obvious one. You'll have less money coming in, which can be especially difficult if you're counting on Social Security to provide a big portion of your income. You may need more money later on in life, especially if you have costly healthcare issues -- and it'll be too late to get it.
- Your cost-of-living adjustments will be smaller: Your cost of living adjustments for Social Security are periodic raises you receive. They're based on your current benefits. For example, you may get a 2% raise if you wait to claim, but if your benefit amount is smaller, your raise is smaller, since 2% of $1,050 isn't as much money as 2% of $1,500.
- Survivor's benefits may be smaller: When one spouse receives a higher Social Security benefit, the surviving spouse can keep that higher benefit upon death. If you were the higher earner and you've permanently reduced your benefits by claiming early, your spouse's survivor benefits will be less than they would've been had you waited to claim benefits.
There are also a few other considerations if you retire at 62. For example, you won't be eligible for Medicare until 65, so you'll have to think about how you'll get healthcare coverage. If you're going to use savings to supplement Social Security, you'll also start running through your nest egg sooner -- which increases the chance you'll run out of money before you die.
Should you claim Social Security at 62?
Since there are arguments both for and against claiming Social Security benefits at 62, you'll need to decide what's right for your situation. Just be sure you understand the reduction in benefits before you make your choice, so you can make the most informed decision about what approach is right for you.
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