3 good reasons to take social security benefits at 62
You will often hear that getting Social Security at 62 is a bad idea. The reason? This will result in a lower monthly benefit for the remainder of your retirement.
Once you reach full retirement age, you are eligible to receive your full monthly benefits based on your income history. FRA is either 66, 67 or somewhere in between, depending on when you were born.
If you apply for social security at 62, your benefits will be reduced by 25 to 30%, depending on your specific FRA. And that’s a pretty big hit to take. Despite this, it makes sense to apply for benefits at age 62 under these circumstances.
1. You want
If you start your retirement with a multi-million dollar nest egg, chances are your savings are your main source of income. And so, if that’s the case, you’ve basically earned the right to apply for Social Security whenever you want, as these benefits will really only be a secondary source of income for you.
In fact, you might be in a situation where your Social Security benefits will only be used for leisure expenses. And if so, you should feel free to apply for these benefits at the age that suits you best.
2. You must
You might not want to claim Social Security at 62 as you would rather have a higher monthly benefit to look forward to. But if you are made redundant at 62, you may need to apply for benefits if you cannot find a new job.
Unfortunately, getting hired can become more difficult later in life. While it is illegal to deny someone a job because of their age, it is also a difficult thing to prove. And so, if you find yourself out of work at age 62, asking Social Security may be your only option to replace your lost paycheck.
Even if you are not forced to leave by your employer, health problems could force you to take early retirement. And if so, you may need to file for benefits at age 62 to make sure you have enough income to cover your expenses.
3. You can turn that money into a continuous source of income
Some people apply for Social Security early with the intention of investing that money in stocks and growing it into a bigger sum. This is a somewhat risky prospect, however, as you will need to generate a return high enough to outweigh the blow you will take in claiming benefits early.
On the other hand, if you file for Social Security at age 62 and use your benefits as seed money to start a business, you could be generating more than enough income to make up for a lower benefit. This is especially true if you have developed a business plan and have savvy management skills.
What is the right decision for you?
Applying for social security at 62 does not make sense to everyone. If you have little retirement savings and are able to continue working into your 60s, it might be beneficial to get a higher benefit and avoid a financial crisis throughout your old age. Likewise, if you enjoy your job and are able to keep it, then you might as well not claim Social Security so your monthly allowance can go up.
But if the above scenarios apply to you, then filing a Social Security claim as early as possible is a decision that could be of great benefit to you. It is therefore beneficial to consider the benefits of claiming benefits once your 62nd birthday arrives.