Waiting until the age of 67 to claim Social Security may seem the most logical decision, but not all retirees work the same way. For some Americans, starting to get the money early can fit better for personal issues that could directly affect the years they’ll live out of retirement.
The Social Security Administration (SSA) allows you to apply for retirement benefits from the age of 62. However, for those born in 1960 or later, the full retirement age is 67 years. Claiming earlier implies a permanent reduction of up to 30% in the monthly benefit.
That doesn’t mean waiting is always the best option, the decision depends on personal circumstances and how much money is needed now versus how much you could get later.
“Try not to make decisions based on assumptions, make the calculations,” Michael Greenwald, director of tax services at Berkowitz Pollack Brant, told U.S. News.
These are five situations in which starting to collect Social Security at the age of 62 could make sense.
Losing employment before retirement can change priorities. A dismissal or a health problem can leave a significant gap in the budget, especially if there are not enough savings to cover the expenses.
“For example, if you’re fired and you need that income,” explains Will South, RichLife Advisors’ national social security adviser.
By 2026, a person who charges Social Security before reaching full retirement age can earn up to $24,480 without their benefits being affected by the income rule. Above that limit, you retain $1 in profits for every $2 earned.
Married couples have one important advantage: they can analyze their performance as part of a single strategy.
One possibility is that the spouse with the highest income waits to apply for their benefits, while the other begins to collect at the age of 62. Delaying the benefit of the worker with higher incomes can increase their monthly payment and also have consequences on benefits for the surviving spouse.
“The benefits must be analyzed individually, but also as a whole,” advises Dustin Wolk, customer adviser at Crescent Grove Advisors.
The decision requires reviewing the income of both, their ages, their savings, and their retirement expectations. In some marriages, combining different ages to claim benefits can generate a more appropriate income flow.
Social Security can not only be used to pay basic bills, some elderly people need additional income to cover daily expenses, travel, help relatives or enjoy activities they had postponed.
“These are your golden years.You want to enjoy them,” says South.
If the available savings are not enough and Social Security money can improve the quality of life during the first years of retirement, apply for it at the age of 62 can be part of a reasonable strategy.
One of the main reasons to consider early collection is the possibility that you will not be expected to receive benefits for many decades.
“If you knew how long you’re going to live, the conversation would be much easier,” says Wolk.
No one can know for sure how long he will live, however, family history and health status can be part of the decision. A person with serious health problems and a family history of reduced longevity could value the money available today differently from a greater benefit in the future.
The maximum amount possible is not always the only priority, some people prefer to start receiving a stable monthly income, even if that implies accepting a smaller lifetime benefit.
“Of course there is the aspect of the data, but also the psychological aspect,” Wolk explains.
Financial tranquility is also part of a retirement, because if having Social Security from the age of 62 allows you to reduce the pressure on savings or cover expenses that would otherwise be difficult to face, that factor can weigh on the decision.
The age of 62 opens the door to Social Security, but does not force you to cross it immediately. Comparing the scenarios before applying for benefits can prevent a decision made today from ending up affecting the income available for many years of retirement.
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