The $600 Social Security Decision That Could Actually Be Worth $103,000 Over Time

The earliest age to claim Social Security is 62. And you may feel that filing as soon as possible is a no-brainer because you don’t know how long you’ll live.

Although claiming Social Security at 62 reduces your monthly benefits on a permanent basis, by starting them sooner, you could end up getting more money in your lifetime compared to waiting.

But that logic doesn’t work if you end up living a long life. And if that’s the case, the decision to file for Social Security at 62 could end up costing you a boatload of money.

How a $600 decision could cause you to lose a lot more

An early Social Security claim might pay off financially if you end up passing away in your early 70s. But if you live 20 years beyond that point, an early claim could mean denying yourself quite a lot of lifetime Social Security income.

Let’s say you’re entitled to a $2,000 monthly Social Security benefit at age 67, which is full retirement age for anyone born in 1960 or later. Filing at 62 reduces your benefit by 30%, costing you $600 a month.

You might think a $600 monthly income loss isn’t such a problem. But that decision could end up costing you much more.

Let’s say you end up living until age 93 and you file for Social Security at 62. In that case, you’ll collect close to $521,000 in total benefits.

Now, let’s say you file for Social Security at 67. In that case, by age 93, you’ll have collected $624,000 in benefits.

The difference is roughly $103,000 in lifetime Social Security income, which is not a small sum.

And there lies the danger in an early claim. You might think you’re losing out on a few hundred dollars a month, and that it’s worth giving up that money to have those checks start right away. But if you live longer than expected, the total amount of Social Security you lose could end up being substantial.

Put a lot of thought into your Social Security claim

The tricky thing about deciding when to claim Social Security is that you don’t know how long you’ll live. But you can use your health and family history to narrow things down.

If you have pretty significant health issues and parents who passed away in their 70s, then filing for Social Security at 62 may be a good idea. But if you have average health and your parents are still alive in their 80s, that could be your clue that waiting to file makes more sense.

Also consider your income needs. If you’re able to continue working at 62, you may want to do so for a few more years rather than take benefits right away. If you’ve lost your job and are struggling to get rehired, you may decide that claiming Social Security could spare you from a fruitless search while helping to ensure that you don’t fall behind on your bills.

Ultimately, it would be incorrect to say that claiming Social Security early is bad. It’s a poor financial choice for some people, but not all people. The important thing to know either way is that an early claim could cost you more money than expected. So make sure to run the numbers before making a final decision.

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