The first reason to claim social security at the age of 62 | Smart Change: Personal Finance
Age 62 is the earliest point at which you can claim Social Security. And if you want your full monthly benefit based on your earnings history, you’ll need to wait until your full retirement age, or FRA, to get it. It won’t start until age 67 if you were born in 1960 or later.
Meanwhile, for each month you sign up for Social Security before the FRA, your monthly benefits will be reduced. Register at age 62 with an FRA of 67, and you’ll look at 30% of your Social Security income.
To be clear, it’s not like your monthly gains will be reverted once you reach FRA. If you file early and lower your benefits, you can expect those lower monthly payments for life.
This is clearly a major drawback to scoring early. But despite this, there is one situation where claiming Social Security at age 62 is a really smart move.
When you need to preserve your retirement savings
Some people plan well into their late 60s or even 70s, only to thwart those plans. The truth is, you never know when health issues or layoffs might prompt you to quit a job. If it happens at a time when the stock market is down, it could put you in a difficult financial situation.
This is the case today. Stock values are dropping across the board, so those who are withdrawing their investments right now could end up incurring huge losses in their investment portfolios constantly hurting them. If you were forced to end your career during a period like this, claiming Social Security early could be your ticket to preserving your retirement savings and making sure there are no losses that increase your chances of depleting your egg. life.
You might be thinking, “But if I claim Social Security early, my benefits rather than my wallet will be affected.” This is true. But if the investment values drop too dramatically, the blow you take to your portfolio may not be able to take it.
One thing to keep in mind is that if you’re a middle-income earner, you can expect Social Security to replace about 40% of your pre-retirement income. But most seniors need nearly twice that amount of income to maintain a decent retirement lifestyle. So you can’t risk draining your retirement account by having to make withdrawals at the worst possible time.
That’s why it’s a good idea for Social Security to provide options for seniors when it comes to choosing your enrollment date. Claiming benefits at age 62 may not be ideal—especially if this was never your plan and you were hoping to apply to the FRA or even later for a higher monthly benefit. But if that’s in between that and risking depleting the nest egg, you may want to choose early registration as the lesser of two evils.
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