The No. 1 Reason to File for Social Security at the Age of 62

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Because you have options for claiming Social Security, it’s a good idea to plan ahead for retirement and develop a filing strategy. You may choose to apply for benefits at full retirement age (FRA) to avoid a reduction in your monthly benefits. FRA begins at the age of 66, 67, or 66 and a specified number of months, depending on your birth date.

 

SOCIAL SECURITY

 

Additionally, you can file after FRA and receive a higher benefit. Each year you delay retirement until you reach the age of 70 increases your benefits by 8%.

On the other hand, you can begin collecting Social Security benefits as early as age 62. This allows you to receive your money sooner, but your benefits will be permanently reduced for each month you sign up ahead of FRA. And, depending on your specific FRA, enrolling in benefits at 62 results in a 25% to 30% reduction in benefits, which is not a small reduction.

Despite this obvious disadvantage, there are some circumstances in which it makes sense to claim Social Security at age 62. And this is perhaps the most compelling reason to take this path.

 

When forced to choose between reduced benefits and unhealthy debt

Many seniors intend to work well into their 60s or even 70s, but their plans are frequently derailed. And you cannot rule out the possibility that this could happen to you.

For instance, you may wish to retire at the age of 70 and begin collecting Social Security benefits at that time. However, what if your company downsizes around your 62nd birthday and you are unable to find a comparable position? If you do not have enough savings to live on, you may be forced to file for Social Security or incur significant credit card debt in order to pay your bills.

Similarly, you may discover that you are unable to maintain a full-time job in your early 60s due to health issues. And those health problems do not have to be your own. If your spouse becomes ill or develops mobility issues, you may be forced to take on the role of caregiver. And that could mean that you are unable to work or pay your bills without a monthly Social Security check.

 

A sound contingency plan

It’s a fantastic idea to plan on filing for Social Security at or near FRA. However, a better bet may be to assume that you will be required to file at age 62, even if that does not occur.

Once you adopt that mindset, it may motivate you to increase your retirement savings, as a larger IRA or 401(k) will be required to compensate for a lower monthly Social Security benefit. Alternatively, it may inspire you to consider additional strategies for increasing your retirement income, such as downsizing and strategically selling a home.

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Filing for Social Security at age 62 is a decision you may wish to make or may be forced to make. However, the fact that the option is available should provide you with some reassurance.

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