When it comes to claiming Social Security benefits, there are different ages at which you can start receiving payments. While the full retirement age (FRA) for those born in 1960 or later is 67, you can choose to file for benefits earlier, at age 62, though this comes with a permanent reduction in your monthly benefits.
While I once believed that claiming at 62 was a bad idea due to the 30% reduction, I’ve changed my perspective. Here’s why I now think 62 could be the perfect time to start receiving benefits.
1. You Don’t Have to Spend the Money Right Away
Although you will receive smaller monthly checks if you claim at 62, this doesn’t mean you have to spend that money right away. If you’re a skilled investor, you could potentially invest those Social Security payments, allowing them to grow and earn returns that could exceed the amount you’d gain by waiting to claim your benefits.
This strategy can be beneficial if you are confident in your investment choices and prefer to manage your funds independently.
2. The Opportunity to Enjoy Life Experiences
Claiming Social Security at 62 gives you the chance to start fulfilling some of your life’s goals earlier. Whether it’s traveling the world, launching a business, or simply enjoying more free time, this could be the perfect opportunity to invest in experiences.
While it’s true that you can do these things later in life, good health is not guaranteed. By claiming early, you can enjoy these experiences while you’re still young and healthy enough to fully appreciate them.
3. More Peace of Mind
For many people, claiming Social Security at 62 can provide peace of mind. While it does result in smaller monthly payments, claiming early may not reduce your total lifetime benefits, especially if you have a shorter life expectancy.
In fact, depending on how long you live, you might end up receiving more in total benefits by claiming early than by waiting until 67. This peace of mind, knowing that you are receiving the benefits you’ve earned earlier rather than later, can be especially comforting.
Claiming at 62 Isn’t Right for Everyone
It’s important to note that claiming Social Security at 62 might not be suitable for everyone. If you are planning to rely on Social Security as your primary source of retirement income, starting benefits at 62 may not be wise, as the reduction in monthly benefits could hurt your finances in the long run.
However, if you have other sources of income like savings, a pension, or investment income, the decision to claim at 62 may be more manageable and could even allow you to maximize your financial flexibility.
The $23,760 Social Security Bonus Many Retirees Miss
Many retirees overlook a significant Social Security bonus that can provide a nice boost to their income. If you’re behind on your retirement savings, understanding these lesser-known “Social Security secrets” could help you increase your retirement income.
It’s worth taking the time to learn more about these strategies so you can make the most of your Social Security benefits.
The Right Time to Claim Depends on Your Situation
While claiming Social Security at 62 might not be ideal for everyone, it’s a valid option to consider based on your individual circumstances. If you have other income sources, good health, and a desire to experience life while you’re still young, then claiming early could make sense for you.
Be sure to carefully weigh the pros and cons of filing at 62 before making your decision, and consider consulting with a financial planner to ensure you’re making the best choice for your future.
