Opting to claim Social Security benefits at 62 is a widely adopted tactic, primarily because it allows recipients to receive the maximum number of payments over time. However, this choice does come with a trade-off: a potential reduction in monthly benefits by as much as 30%. This decrease is due to the penalties imposed when beneficiaries draw their benefits before reaching their full retirement age (FRA), which is currently between 66 and 67 for most workers today.
That said, claiming benefits early isn’t necessarily a poor choice for everyone. In fact, there are specific situations where this might be the most sensible move.
### 1. Immediate Financial Needs
For many retirees, delaying Social Security can boost their benefits incrementally each month. This increase doesn’t halt at full retirement age. If you wait until 70, you could receive up to 32% more per check compared to claiming at your FRA. This sounds appealing but means forgoing benefits for several years.
Being able to delay is feasible for those with significant personal savings or ongoing employment income, but if you’re lacking alternative income sources, you might need to access Social Security sooner. Although it might reduce your lifetime benefits, opting for early benefits is preferable to accruing debt. While larger checks in the future are attractive, current financial stability takes precedence.
### 2. Shorter Life Expectancy
Often, delaying benefits can lead to a greater cumulative payout over time, but it’s crucial to factor in your expected lifespan. Typically, those who anticipate living into their mid-80s or beyond gain the most from waiting. Conversely, those with a shorter projected lifespan might benefit more from claiming earlier.
If you face terminal health issues or have a concerning personal or family health history, claiming benefits as early as 62 ensures you receive more payments while you’re alive. However, it’s important to remember that if you have dependents, early claiming could reduce the survivor benefits they’ll receive after you’re gone. If that concerns you, waiting might be a better strategy.
### 3. Lower-Earning Spouse in Couples
A frequently recommended approach for couples looking to optimize their Social Security income is for the lower earner to claim benefits at 62. This provides additional income for the household while the higher earner delays claiming to maximize their future benefits.
Once the higher earner begins collecting Social Security, the lower earner can switch to receiving spousal benefits if it’s greater than what they’d receive otherwise. Spousal benefits can be up to half of the higher earner’s FRA benefit.
This strategy is particularly effective in households where there’s a significant disparity in lifetime earnings. For couples with similar earnings, it generally makes more sense for each partner to select a claiming strategy that suits their unique financial and lifespan projections.
Ultimately, even if retirement seems a long way off, considering when you’ll claim Social Security is wise. Having a flexible plan now allows for better adjustments as you move closer to your retirement years.
