Claiming Social Security at 62 Could Really Hurt You If These 3 Things Apply to You

When it comes to signing up for Social Security, you have options. You can wait until full retirement age (FRA), at which point you’re allowed to collect your full monthly benefit based on your earnings history. You can delay your filing until age 70 and boost your benefits by 8% in the process. Or, you can sign up for Social Security ahead of FRA — as early as age 62, in fact.

A large number of seniors opt to go the latter route, so much so that 62 remains the most popular age to claim benefits. But while filing for Social Security works out for a lot of people, if these factors apply to you, that decision could sorely backfire.

Closeup of older man resting hand on forehead

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1. You don’t have a lot of retirement savings

Social Security will replace about 40% of your former wages if you’re an average earner. But most seniors need at least 70% to 80% of their previous income to live comfortably, and that’s where personal savings come in. If you’ve missed the boat on that, though, then the last thing you can afford to do is slash your Social Security income, in which case filing at 62 could end up being a huge mistake.

2. You expect to live a long life

Without a crystal ball, it’s impossible to know how long you’ll live. But there are certain indications that could point to a longer lifespan — strong health, good genes, and a commitment to eating well, to name a few. Living a long life is a good thing in theory, except from a savings standpoint, it increases your risk of depleting your nest egg in your lifetime. Therefore, if you anticipate living a long life, you’d be wise not to cut your monthly Social Security benefit by claiming it at 62. If you slash your benefit and then run out of money in savings later in life, you might really struggle to make ends meet.

3. You have high hopes for a busy retirement

Some retirees are content to spend their days gardening, volunteering in town, or helping to care for their grandkids. But if that’s not what your dream retirement looks like, then you may need a lot more money from Social Security than what you’ll get by filing at 62. If your ideal plans include extensive travel, for example, then you’ll spend a lot more money than someone who’s content to spend retirement jumping from book club to book club and playing cards at the local community center — and so you’re probably better off waiting until at least FRA to file.

What will claiming Social Security at 62 do to your benefits?

For each month you file for benefits ahead of FRA, your monthly Social Security payout is reduced on a permanent basis. And if you claim benefits at 62, you’ll slash your monthly benefit by 30% if your FRA is 67, which is the case for anyone born in 1960 or later. This means that if you’re entitled to $1,500 a month from Social Security, you’ll get just $1,050 a month instead.

In some cases, filing for benefits at 62 is a smart move that makes a lot of sense. But if the above scenarios apply to you, you’re probably better off waiting. That way, you’ll avoid financial difficulties during retirement, and you’ll be more likely to afford the things you’ve always dreamed of doing during this exciting stage of life.

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