Your monthly Social Security benefit is calculated using your wages from your 35 highest-paid years in the workforce. From there, the age you file at will determine how much money you get.
You’re eligible for your full monthly benefit based on your earnings history once you reach full retirement age (FRA), which is 66, 67, or somewhere in between, depending on your year of birth. But you don’t have to wait that long to claim benefits. You can sign up as early as age 62.
For each month you file for Social Security ahead of FRA, your monthly benefit shrinks, and filing at 62 will cause up to a 30% reduction, depending on your FRA. In spite of that, it could still pay to claim benefits at the earliest age possible. Here are three good reasons to sign up at 62.
1. Travel is back
Many people spent most of 2020 and the first part of 2021 stuck at home. And while the Delta variant may be throwing a wrench into some people’s travel plans, you may feel comfortable exploring new places based on your health and vaccination status.
Right now, a lot of countries that were previously closed off to U.S. travelers are opening their borders. Plus, there aren’t restrictions or quarantine requirements for domestic travel. That means you may have an easier time visiting the places you want to go. And if you’ve worked hard all your life and need money from Social Security to fund those trips, filing early may be something you’ve more than earned.
2. Your job isn’t good for you
If the pandemic taught us anything, it’s to treasure our good health. But if your job is stressful or strenuous, to the point where it’s negatively impacting your health, then claiming Social Security benefits at 62 could be your ticket to leaving it behind and pursuing a healthier endeavor.
This isn’t to say that you need to file for benefits at 62 and retire. But having that money could buy you the freedom to explore different job opportunities and find one that’s a better fit. You may even decide to start your own business to not only earn an income now, but have another income stream during retirement.
3. You’re not a risk-taker
Delaying Social Security does mean taking the risk that you won’t live very long and will therefore end up with less money from the program in your lifetime. Say you’re entitled to a $1,500 monthly benefit at an FRA of 67. Filing at 62 will leave you with $1,050 a month instead, which reads like a financial hit at first. But if you only end up living until age 73, you’ll wind up with more than $30,000 extra in lifetime benefits by virtue of having filed early.
Now to be clear, if you have no reason to believe you won’t live an average lifespan, then this reasoning may not hold up for you. But if you have any doubts about your health or a family history of dying young, then you may want to sign up for benefits as early as possible rather than take the risk of waiting and ultimately getting less money all in.
Claiming Social Security at 62 isn’t right for everyone. If you haven’t saved much for retirement and will need your benefits to cover the bulk of your senior living expenses, then you may want to sit tight and file at a later age. But you should know that signing up for benefits at 62 could make it possible to travel while you’re relatively young and leave a job that’s harmful to your health. And it could also give you some peace of mind knowing that you began collecting those benefits as soon as you were able to.
