If you’re turning 62 this year, you become eligible for Social Security retirement benefits. This means after your birthday, you can claim your checks and start collecting reliable income from the government every month.
Chances are good you’re eager to have this money coming in as soon as possible. But, should you file for your Social Security check to begin right away? That’s actually a pretty complicated question. Here are a few things to know to help you decide.
Claiming Social Security early will shrink your benefits
Before you consider claiming Social Security at 62, you should know that doing so will reduce the benefits you receive. You have a standard benefit you’re entitled to, but you’ll receive it only at your full retirement age, which is later than 62. If you’re turning 62 in 2025, you were born in 1963 and anyone born in 1960 or later has a full retirement age of 67. If you claim your Social Security benefits at 62, you’re starting them five full years before your FRA.
This can result in a substantial reduction in benefit income. You’ll hit with an early filing penalty for each month you file early, with the penalties equaling:
- 5/9 of 1% per month for the first 36 months of early claiming
- 5/12 of 1% per month for any month prior to that
A claim at 62 with an FRA of 67 is made 60 months early and results in a 30% reduction in your monthly payment. If you were on track for $2,000 at 67, you’d shrink that amount down to $1,400, That’s a lot less money.
Does that mean you shouldn’t claim Social Security at 62?
Obviously, taking a $600 monthly hit to your benefits is a big deal. But, that doesn’t necessarily mean there are no circumstances when you should claim benefits early. After all, it’s important to remember that when you claim at 62, you start getting money right away. Although your checks are smaller, you get more of them during your life.
If you pass up five years of benefits totaling $1,400 per month so you can wait to claim your checks at 67, you’ll have given up $84,000 in Social Security income you could have had. Sure, you’ll get $600 more a month starting at 67. But, making up the missing $84,000 at a rate of $600 extra per month will take 140 months or 11.67 years. If you don’t live until 78.67, you’d end up with lower lifetime benefits in total.
On the slip side, though, if you delayed your claim and live past 78.67 years old, that extra $600 a month you get each month thereafter is money you would have missed due to the early claim. Since many people do have longer life expectancies now, the odds are that you would get bigger lifetime benefits if you wait.
Trying to maximize total lifetime benefits is important, but it is also just one factor to think about when deciding whether to claim. If starting checks at 62 is the only way to retire early, you may decide it’s worth it. But, if you have a lower-earning spouse, on the other hand, then you should know your early claim could shrink not only your benefits but also their survivor benefits. This could leave them in the lurch.
There’s a lot to think about, and it may be worth talking with a financial advisor for help to optimize your claiming choice. One thing to keep in mind, though, is that you should not rush into claiming at 62 until you fully understand the price you are paying for that early claim.
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