Personal Finance

Claiming Social Security at 62? Ask Yourself This Question First

Maurie Backman

Published: February 27, 2025 9:33 am

There’s a reason 62 has long been a very popular age to claim Social Security. It’s the earliest point in life you can sign up for benefits.

But there’s a big downside to claiming Social Security at 62. If you do so, you’ll reduce your monthly benefits on a permanent basis.

See, you’re not eligible for your complete monthly Social Security benefit until full retirement age (FRA) arrives. FRA hinges on your year of birth, but it’s 67 for people who were born in 1960 or later. If 67 is when you reach FRA and you claim Social Security at 62, your monthly benefits are reduced by about 30%.

Of course, the upside of claiming Social Security at 62 is getting your money sooner. But before you make that choice, you’ll need to ask yourself one important question.

How much money will my savings give me each year in retirement?

It’s hard to know whether you can afford a hit to your monthly Social Security income without assessing your savings first. So before you sign up for benefits at 62, take a close at your IRA or 401(k).

But one thing you don’t want to do is look at your balance and call it a day. And the reason is that a large retirement plan balance can be deceiving.

It may be that you’re 62 years old with $2 million in your IRA. That’s a lot of money. But how much income does it give you on an annual basis in retirement? That’s the tricky thing to figure out.

Let’s say you want to start tapping your nest egg at 62, but you have parents who are still alive in their late 90s. That means you might live that long, too, especially if your health is great. And that means you might need your savings to last for 35 years or even longer.

Based on that, you may want to limit yourself to a 3% withdrawal rate. And in that case, a $2 million nest egg produces $60,000 a year, or $5,000 a month, of retirement income.

Now maybe that’s a nice sum of money for you to live on. But maybe your retirement budget requires you to have a lot more money than that to maintain your preferred lifestyle.

That’s why it’s so important to see how much annual income your savings will give you before claiming Social Security at 62. It may be that you can afford a permanent hit to your monthly benefits because your nest egg can compensate. But maybe not. So it’s essential to run the numbers before signing up.

You may want to get a professional’s input

The 3% withdrawal rate used above is just an example, and is just one option out of many when it comes to taking IRA or 401(k) distributions. Your best bet is to consult a financial advisor and have them help you determine how much of your savings to withdraw each year.

A financial advisor can also offer guidance on when to claim Social Security. They can account for your expenses, savings balance, investment mix, and life expectancy to give you a solid recommendation.