Claiming Social Security at 62? You Might Regret That
Sixty-two is the youngest age you become eligible for Social Security retirement benefits. Since this is the first time you can get your hands on this money, you may be eager to claim benefits right when you meet this milestone.
Unfortunately, if you file for benefits at 62, you could end up with serious regrets. Here’s why.
Your monthly checks will be a lot smaller
If you claim Social Security at the age of 62, it’s considered to be an early claim. In fact, it’s the earliest claim you can make. And that’s a big problem when it comes to the size of your check.
See, if you wait until your full retirement age, you will receive a benefit equal to a percentage of average wages earned over the 35 years your salary was highest. This benefit is called your primary insurance amount (PIA).
But if you don’t wait until FRA, you are subject to early filing penalties for each month benefits are claimed ahead of it. These reduce your PIA. If you were born in 1956 or after, your FRA is between 66 and four months and 67. So a claim at 62 could be as much as five years early. Starting checks under these circumstances would result in a whopping 30% reduction in your primary insurance amount.
The reduction in your benefits will last for the rest of your life. If you get older and your medical care costs increase or your savings starts running out, you may regret shrinking your payments by having made an early claim for Social Security.
Your spouse could face financial hardship because of your decision
If you’re the higher earner in your relationship, you aren’t just impacting the size of your own benefit if you claim Social Security at 62.
See, spousal benefits are there to provide for whichever spouse lives the longest. Spousal benefits allow the surviving partner to keep the higher of the two checks coming into the household at the time of death.
If you should’ve had a hefty benefit because you earned a good living but you shrank your Social Security check by as much as 30% due to claiming benefits at 62 instead of waiting, your spouse’s survivor benefits could be up to 30% smaller than they otherwise would have been.
Now, this may not matter if your partner had a comparable salary to you or made more than you, since their own retirement benefits would be similar to or higher than the survivor benefits you would leave behind. But if you were the primary breadwinner, a claim at 62 could be a regrettable choice if you leave your widow struggling.
It’s important to consider these key issues before you file for Social Security at 62. You may decide you’re OK with a smaller check for life and you don’t care about survivor benefits. But you have to make that choice consciously.
Otherwise, when you discover later on that your decision doomed you and your partner to getting less money each month, that news might come as an unpleasant surprise that makes you wish you’d made a different choice.
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