Want to Take Social Security at 62? Here’s Why That Could Be a Costly Mistake

You have a choice of when to claim Social Security benefits, and in theory, you are supposed to be able to claim them any time between the ages of 62 and 70 and get the same amount of lifetime benefits.

That’s because a system of early filing penalties and delayed retirement credits is in place. Under this system, early claimers are supposed to get more checks, but each one is going to be smaller — up to 30% lower than the standard benefit if you claim at 62. On the other hand, late filers are supposed to get fewer checks, but each will be larger. A person who claims at 70, for example, would get up to a 24% bump in their standard benefit. 

Things don’t always work out that way, though. In fact, claiming at 62 could be a costly mistake for a few big reasons. Here’s why. 

Why you could regret claiming Social Security at 62

The biggest reason that you could end up regretting a benefits claim at 62 is that you are likely to end up with more lifetime income if you wait. Research has shown that virtually all Americans who were between the ages of 45 and 62 should wait until after 65 to start their benefits, and the same research showed that over 90% should wait until they reach the age of 70. 

It’s a near-universal truth that delay is the better choice because the system of early filing penalties and delayed retirement credits was created when life expectancies were shorter. The majority of people outlive their projected lifespan that was used to design the Social Security benefits system, so they end up with more money from the earned benefits program if they put off their claim until the latest possible age and max out their delayed retirement credits. 

Not only that, but an early claim could also have an adverse impact on your spouse. If you were the higher-earning person in your relationship and you die first, your spouse gets to keep your larger Social Security benefit. Unfortunately, if you shrunk your benefit with an early claim, this means your widow or widower gets stuck with the reduced benefit instead of either your standard benefit or your benefit enhanced by delayed retirement credits because you waited. 

While it may be challenging to delay your claim, the payoff can be big in terms of making sure you cover your costs late in life and making sure you maximize the money you get out of the benefits program since you are paying in throughout your entire working life. 

Aim to delay your Social Security benefits claim and give your benefits a boost

While you may be eager to claim your benefits as soon as you become able to do so at 62, as you can see, you should think seriously about waiting to get started. Otherwise, you’ll be passing up the best chance at both maximizing your lifetime income and making sure your surviving spouse is provided for when you are gone.

Delaying a Social Security claim may require careful planning, though. Not that many people want to work until the age of 70, and if you don’t want to do so but you do want to put off your benefits claim, you’ll need to have other sources of income to support you until the time comes to claim Social Security.  This often means having a good amount of money invested so you can produce enough money to live on at a safe withdrawal rate.

A financial advisor can help you to make a plan to support yourself without Social Security until 70 and can work with you to confirm that a delayed claim really is in your best interests as you make your plans for your retirement years.