Why Filing at 62 Costs This Retiree 30% of Every Social Security Check for Life
Signing up for Social Security the moment you turn 62 feels like a smart move until you see what it does to every check you collect for the rest of your life. Before you lock in that filing age, there…
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Some of the biggest financial choices you might have to make in your lifetime are likely to center around retirement. When should you stop working? Is it too soon to tap your savings? And when should you sign up for Social Security benefits?
There’s a lot riding on your Social Security filing decision. Though your monthly benefit in retirement is based on your personal wage history, your filing age also helps determine how much money you get each month. And one claiming choice in particular could result in reduced benefits for life.
Be careful when claiming Social Security at 62
Because 62 is the earliest age to file for Social Security, it can be tempting to sign up then. But it’s a decision that could prove costly.
Let’s imagine John is getting ready to retire at 62. John has savings and a pension, but claiming Social Security would give him extra spending money.
If John is 62, his full retirement age (FRA) for Social Security is 67. If he files for benefits at 62, he’ll reduce those monthly checks by 30% for the rest of his life.
John might think that’s not such a big problem, since he has savings and a pension. But what if the pension is tiny and his savings eventually run out? At that point, John is looking at much smaller Social Security checks for life because he didn’t want to wait to get that money.
Choose your filing age carefully
In our example, John is choosing to claim Social Security at 62 when waiting is an option. That’s not always the case.
Let’s say you’re laid off at 62 and can’t find another job. If you don’t have savings, you may have no choice but to claim Social Security right away to cover your expenses and avoid costly debt.
The point, however, is that if you don’t have a compelling reason to claim Social Security at 62, you may want to hold off. Filing early slashes your benefits to a large degree, and it’s a choice you might regret down the line if other income streams run dry and your expenses go up.
You should also recognize that claiming Social Security at 62 means leaving a spouse with smaller survivor benefits if you’re the higher earner in your household. If you’re not married, that’s obviously not a concern. But if you’re married, are the higher earner, and have a much younger spouse, that’s another layer to think about.
Finally, do remember that Social Security benefits are eligible to get a cost-of-living adjustment every year so they’re able to keep up with inflation. If you slash your benefits by claiming Social Security at 62, every raise that arrives is apt to result in a smaller increase, since you’ll be starting with a lower baseline.
This isn’t to say that claiming Social Security at 62 is always a bad idea. The takeaway, rather, is to truly make sure you understand the consequences of doing so before locking in your filing age and accepting those reduced checks for good.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, The Washington Post, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
