Taking Social Security At Age 62? 5 Things To Consider

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Deciding when to start taking Social Security is one of the key questions retirees and potential retirees face. The right answer can be different depending on your unique financial situation and life expectancy. 

Age 62 is the earliest you can start claiming Social Security retirement benefits, but there are significant advantages to waiting. Here are five things to consider before you rush to claim Social Security as early as you can.

1. Reduced benefits

The main drawback to claiming Social Security at age 62 is that your monthly benefit will be reduced by 30 percent compared to the amount you would get if you waited until full retirement age, which is age 67 for those born in 1960 or later. Your benefits will increase 8 percent for each year you delay beyond age 67 up until age 70, when there’s no longer a benefit to waiting.

Social Security also comes with a cost-of-living adjustment, or COLA, each year, and if you take the reduced benefits at age 62, your annual COLA will be based off this reduced amount. The impact over your remaining life can be substantial. 

2. Your retirement spending plan

Before you decide when to start claiming Social Security, you’ll want to have a clear picture of your spending goals. The primary focus of retirement planning is to make sure you have enough in savings and income to cover your expenses. The tricky part is that you have to plan for a 20- to 30-year time frame. 

Some people need Social Security benefits right away in order to meet their spending plan, while others have enough in savings that they can afford to wait. While most financial advisors encourage clients to delay the start of Social Security if possible, there are scenarios where you may need to claim benefits earlier. 

3. Health care costs

One cost that people sometimes neglect when it comes to retirement planning is health care. Health care costs have increased over time, and the later stages of life are often when they become most significant. 

If you take Social Security at age 62, you’ll need to consider how to pay for health care until you can sign up for Medicare at age 65. The need to purchase a private plan can add significant costs to your budget in those early retirement years and could eat up a chunk of your Social Security check each month. 

4. Life expectancy 

One big factor to consider when deciding when to start Social Security benefits is your life expectancy. If you have serious health issues or other reasons to expect that you may not live for a long time, it may make more sense to start claiming Social Security at an earlier age. 

Keep in mind that someone who’s 65 years old is generally expected to live into their mid-80s, with women typically living slightly longer than men. The higher Social Security benefits that come with waiting to collect until age 70 can come in handy when you live into your 80s or 90s. 

5. Spousal benefits

If your spouse’s Social Security benefit is higher than yours, you can claim benefits based on their record, but claiming those benefits early comes with a bigger hit. The benefit is reduced by 35 percent when you claim a spouse’s benefit at age 62 compared to waiting until your full retirement age. 

Claiming benefits early can also reduce your spouse’s benefits if you die first, because the benefits are permanently reduced.

Bottom line

Claiming Social Security benefits at age 62 may be necessary for some retirees, but the decision shouldn’t be taken lightly. You’ll receive reduced benefits, and it can impact your spouse’s benefits long after you’re gone. Be sure you’ve considered your spending needs, including health care costs, before you decide to start collecting. 

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