Social Security may be best taken early. Millions of seniors depend on Social Security, and your claim age determines your monthly benefit. A 2020 Bipartisan Policy Centre analysis indicated that 35% of men and 40% of women file at 62, the most common age. It’s the most common filing age, but not the greatest. One good reason to wait a few years, even though claiming early is best.
Couple enjoying retirement and benefits of Social Security (Source: The BalaceKEVIN DODGE/BLEND IMAGES/GETTY IMAGES)
Reasons to Claim Retirement at 62 Years Old
Early retirement is easier. There are several reasons to retire early. Some retire in their early 60s to enjoy an active retirement, while others retire early due to job loss or illness. Retirement doesn’t require Social Security, but it generally does. Early retirement without benefits could deplete your funds because you’ll have to live on other income for a few years. Early retirement lowers monthly costs, but some income other than savings can make it easier.
You won’t risk your longevity. Social Security is designed to provide nearly the same lifetime benefits regardless of when you file. Early claims result in lower monthly payments but higher lifetime checks. By deferring benefits, you’ll receive fewer but larger payments. However, this assumes an average lifespan. Delaying benefits might mean earning tens of thousands more over a lifetime if you expect to live into your 80s. However, life is unpredictable, and wagering on longevity is dangerous. If you file early and live long, you may lose additional advantages. If you delay benefits and have health issues, you’ll miss out on retirement fun.
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Claiming Early May Not be Wise It Will Considerably Reduce Monthly Income
Again, if you live a typical life, your lifetime benefits should be nearly identical. Filing early reduces your monthly payments significantly. To get the entire compensation based on your career earnings, claim at full retirement age. By filing before your FRA, your benefits will be permanently decreased. Waiting until after your FRA to claim will give you your full benefit plus a monthly bonus. If you file at 67, you’ll receive $1,800 per month, which is the average retirement pension as of August 2023.
If you file at 62, your monthly benefits would drop 30% to $1,260. Wait until 70 to get $1,800 plus 24%, or $2,232 each month. That’s $972 more each month than at 62. Extra money might change your life if your savings are low. Both early and delayed Social Security claims have pros and cons. Priorities will help you choose the right age for your situation. This best card includes a $0 annual fee, one of the highest cash-back rates (up to 5%), and 15 months of 0% interest on purchases and debt transfers.
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