They Say To Take Social Security at 62 But Is That The Best Advice?

When you’re nearing retirement age, the decisions you make regarding your Social Security benefits are going to shape your financial future. Chances are good that you’ll end up turning to the Internet for advice, and when you do, you may get a lot of conflicting suggestions.

For example, while many sources say you should wait to claim your benefits until age 70 in order to max out your monthly checks, there are also some experts suggesting that you claim Social Security at 62. So, is that the right advice, and should you listen to those professionals and commentators who recommend the earliest possible claim? 

Why would you take Social Security at 62?

There are several really good arguments that you may come across for claiming Social Security at 62, including the following:

• Claim at 62 to enable early retirement:  Many people can’t afford to retire without Social Security. As a result, delaying your benefit claim beyond 62 may mean delaying your retirement. Giving up some of your youngest and potentially healthiest years of retirement may not be worth it, even if you do get larger benefits later. 
• Claim early because the buying power of benefits is eroding. Although Social Security benefits are supposed to keep pace with inflation, the reality is that the formula used to calculate Cost of Living Adjustments is an imperfect formula that underestimates actual inflation seniors experience on the goods and services they buy regularly. Since benefits lose ground over time,  you may as well claim them ASAP before their value erodes further. 
• Claim before benefit cuts happen. Social Security is facing some financial issues as the trust fund used to pay benefits is running dry and is expected to run out by 2034.  Some people may want to claim Social Security at 62 because they are afraid they’ll see benefits reduced later, and they want to get as much as they can before that happens.
• You don’t know if you’ll outlive your life expectancy. A delayed Social Security claim only really benefits you if you live longer than you were projected to when the system was created. There are early-filing penalties and delayed retirement credits built into Social Security that are aimed at equalizing out the lifetime benefits for early and late claims. If you wait to claim benefits, you only end up with more lifetime income if you outlive the life expectancy projections in place when this system was created. Many people don’t want to gamble on living long enough to make up for foregone funds. 
• To preserve your savings. If you do retire at 62 and don’t claim Social Security, there’s a risk you could withdraw too much from savings too fast. If you can’t maintain a safe withdrawal rate without Social Security, you should not risk draining your retirement account.

So should you claim benefits at 62? 

While there are obviously some good reasons to claim Social Security at 62, there is also a major downside. You will substantially reduce benefits.  If you have a full retirement age of 67 and claim benefits at 62, you’ll see a 30% cut to your standard benefit. That is a lot of money to give up — especially when research has shown 7 in 10 retirees end up in a better financial position if they wait until 70 versus if they claim at 62.  You could also shrink survivor benefits if you are the higher earner in your household.

Ultimately, there are a lot of competing factors that affect when you should claim Social Security benefits. You should work with an experienced financial advisor to determine what your best claiming age is so you can make the choice that’s truly best for your personal situation. 

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