For many, claiming Social Security at 62 is often seen as a mistake due to the permanent reduction in benefits. However, more Americans are realizing that for some, this early move could be the key to a more fulfilling retirement.
While waiting until full retirement age (FRA), usually 67 for those born in 1960 or later, can maximize your benefits, claiming early might provide freedom and financial flexibility that many overlook.
In this article, we’ll explore the reasons why claiming Social Security at 62 might actually be the smart move for certain individuals.
The Trade-Off: Reduced Benefits vs. Early Access
When you decide to claim Social Security at age 62, you are permanently reducing your monthly benefits. For those whose full retirement age (FRA) is 67, the reduction can be as much as 30%.
While this may seem like a big financial hit, it’s not always a dealbreaker. For many, claiming early can offer benefits that outweigh the loss in monthly income.
Here’s a breakdown of the potential benefit reductions based on the age you claim:
| Claiming Age | Benefit Reduction (if FRA is 67) | Percentage of Full Benefit |
|---|---|---|
| 62 | 30% | 70% of Full Benefit |
| 63 | 25% | 75% of Full Benefit |
| 64 | 20% | 80% of Full Benefit |
| 65 | 13.3% | 86.7% of Full Benefit |
| 66 | 6.7% | 93.3% of Full Benefit |
| 67 | 0% | 100% of Full Benefit |
While the reduction is permanent, the earlier access to Social Security funds can be beneficial if you have a healthy nest egg and plan to use Social Security as a supplementary income.
When Social Security Isn’t a Necessity
The median retirement savings for Americans aged 65 to 74 is just about $200,000. For most people, Social Security is a vital source of income, and waiting to claim it might seem like the logical choice to maximize their benefits.
However, for those who have managed to save adequately for retirement, Social Security isn’t a primary income source — it’s a nice bonus.
In cases where Social Security is not essential to meet basic living expenses, claiming at 62 can be a way to enjoy the benefits of retirement earlier without impacting the core of your finances.
For instance, you may want to travel, explore new hobbies, or spend more time with family during your early retirement years. Claiming early allows you to use those funds to pursue your goals, without having to dip into your savings or investments.
Focus on Lifestyle, Not Just Financial Numbers
While financial considerations are a huge factor in the decision, don’t overlook the broader implications. If you’re healthy, financially secure, and eager to enjoy life sooner, claiming at 62 may be a way to improve your quality of life during your retirement years.
The freedom to access your Social Security benefits at this age could allow you to enjoy your golden years with fewer worries about finances and delaying gratification.
Here are a few reasons why claiming at 62 might be the smart choice for you:
- Lifestyle Flexibility: You can use the funds to enjoy early retirement activities without relying heavily on savings.
- Health Considerations: If you’re in good health, claiming early lets you use your benefits when you’re physically able to enjoy them.
- Minimized Stress: Early access to Social Security means less financial stress, freeing you to focus on retirement goals instead of future financial uncertainties.
When Is Claiming Early Not a Good Option?
For those who have minimal retirement savings or whose Social Security benefits are their primary income, it might be more prudent to delay claiming until you reach your full retirement age (FRA) to maximize the amount you receive.
Also, if you’re in poor health or expect to live longer, delaying could provide a better return on your investment over time.
Claiming Social Security at 62 is often labeled as a bad financial move, but for many, it may actually be the smartest decision.
If you are financially secure, in good health, and eager to enjoy life in your early retirement years, taking your Social Security benefits early could provide the flexibility you need.
While there’s no one-size-fits-all solution, for many, claiming early means more time to enjoy life and freedom in retirement, without the burden of waiting until full retirement age.
FAQs
Can I claim Social Security at 62 even if I’m still working?
Yes, you can claim Social Security at 62 while still working. However, if you’re under your full retirement age, your benefits may be temporarily reduced depending on how much you earn.
How much will my Social Security payment be reduced if I claim at 62?
If your full retirement age is 67, claiming at 62 will result in a 30% reduction in your monthly payment.
What are the benefits of claiming Social Security at 62?
Claiming at 62 allows you to access your benefits earlier, giving you financial freedom to enjoy retirement and pursue personal goals without relying on savings