3 Reasons Not to Claim Social Security at 62
Claiming Social Security at 62 can reduce your monthly checks by 30% if you file before your full retirement age. However, there are reasons not to take benefits at 62, including having little savings, expecting a long life, and being the higher earner in your household.
Intelligence analysis by Llama
Claiming Social Security at 62 can be a bad idea if you don't have enough savings, expect to live a long life, or are the higher earner in your household. This can lead to reduced monthly checks and potentially hurt your spouse's survivor benefits.
Imagine you have a big jar of money that you save for when you retire. If you take money out of the jar too early, you might not have enough money left when you really need it. That's kind of what happens when you claim Social Security at 62 – you get less money each month, but you also get it for a shorter amount of time. It's like taking a smaller amount of money out of the jar, but for a shorter time.
Analysis
Savings Shortfall
If you barely have any savings, claiming Social Security at 62 can be a recipe for financial disaster. Without a robust IRA or 401(k) balance, you may struggle to cover your living costs, and filing for benefits early can exacerbate this issue. In such cases, waiting until full retirement age or beyond may be a more prudent choice.
Long Life Expectancy
Social Security is designed to provide roughly the same lifetime benefit regardless of the age at which you file. However, if you expect to live a long life, waiting to file for benefits can put a larger lifetime Social Security check in your pocket. This is because waiting will make those payments larger each month, but you'll collect fewer payments in total. If your health is outstanding and your parents are still alive in their 90s, that could be a signal to wait.
Higher Earner in the Household
Claiming Social Security at 62 may not just impact you; it could also affect your spouse. If you're much older than your spouse, they may end up outliving you. And if you're the higher earner of the two of you, you should be eligible for survivor benefits from Social Security in the event you pass away first. If that's the case, claiming benefits at 62 doesn't just mean reducing your monthly checks; it also means reducing your spouse's potential survivor benefits.
Key points
- Claiming Social Security at 62 can reduce your monthly checks by 30%.
- Filing at 62 can be a bad idea if you don't have enough savings.
- Expecting a long life can also make waiting to file for benefits a better choice.
- Being the higher earner in your household can also impact your spouse's survivor benefits.
If you wait to claim Social Security benefits until your full retirement age or beyond, you may be able to collect a larger lifetime benefit. This is because waiting will make those payments larger each month, and you'll collect fewer payments in total. If you expect to live a long life, waiting to file for benefits can put a larger lifetime Social Security check in your pocket.
If you claim Social Security at 62, you may end up struggling to cover your living costs in retirement. Without a robust IRA or 401(k) balance, you may have to rely on your Social Security benefits to make ends meet, which can be a recipe for financial disaster. Additionally, if you're the higher earner in your household, claiming benefits at 62 can also reduce your spouse's potential survivor benefits.
