The age at which you begin claiming Social Security will affect your monthly income for the rest of your retirement, so it's critical to choose wisely. Age 62 is the earliest you can file, and it's also the most popular age among retirees. Around 35% of men and nearly 40% of women take Social Security at 62, according to a 2020 survey from the Bipartisan Policy Center.
In some cases, claiming as early as possible can be a smart idea. But in others, it could potentially be a $6,480 mistake. Here's why.
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How filing early will affect your income
There's nothing inherently wrong with taking Social Security at 62. However, it will reduce your monthly income significantly, and that can add up over time.
To collect the full benefit amount you're entitled to based on your work record, you'll need to wait to claim until your full retirement age (FRA) -- which is age 67 for anyone born in 1960 or later. The earlier you file for benefits, the less you'll receive each month.
If you have an FRA of 67 years old and begin claiming at 62, it will result in a reduction of 30% per month. This adjustment is permanent, too, so you won't start collecting larger checks once you reach your FRA. In some cases, this could reduce your benefits by thousands of dollars per year.
For example, as of March 2023, the average benefit amount among retirees is around $1,800 per month. If we assume that's how much you'll collect at your FRA of 67 years old, filing at 62 would result in checks of $1,260 per month. That's a reduction of $540 per month, or $6,480 per year.
When claiming at 62 is still worth it
If you know that money will be tight in retirement, claiming early could make things more difficult. Waiting just a few years could amount to thousands of dollars more per year, so if you're looking to maximize your monthly income, delaying benefits can be a smart move.
But that doesn't mean filing at 62 is always a bad idea. There are some situations where it may be worth sacrificing the larger monthly payments, such as:
- You're forced into early retirement: If you lose your job or can no longer work due to health issues, you don't necessarily have to start taking benefits. But if you don't, you may risk draining your savings too quickly. In this case, taking Social Security immediately can help protect your retirement fund.
- You don't expect to spend decades in retirement: This isn't the most pleasant topic to think about. But if you're battling health problems or have other reasons to believe you may not live well into your 80s or beyond, you could collect more in total by claiming early.
- You have a plan with your spouse: If you're married and you and your spouse both qualify for Social Security, it's smart to have a plan for when each of you will file. Maybe you both plan to claim at 62 to retire as early as possible, for example, or perhaps one of you will file early while the other delays benefits.
There's not necessarily a right or wrong answer as to when you should start taking Social Security, but it's important to know how your decision will affect your monthly income. Filing at 62 will reduce your payments substantially, which can be a drawback if you need that money in retirement.
In some cases, though, it's worth the sacrifice. By considering your unique situation and retirement goals, it will be easier to decide whether it's the right move for you.
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