Here’s Why You’re Planning to Apply for Social Security at 62 — Even If You Hope to Apply Later
Your Social Security filing age can have a huge impact on your financial position when you retire. The sooner you apply for benefits, the less income you will receive each month. And the more you delay your filing (to a certain extent), the more generous of a benefit you can expect.
It is for this reason that some seniors prefer not to claim social security at 62 years old, which is the earliest age to sign up for benefits. Instead, they prefer to wait until full retirement age (FRA), or even beyond.
In fact, every year that benefits are deferred beyond the FRA, they are permanently increased by 8%, until age 70. And so even seniors with the latest FRA of 67 get a chance to score a 24% increase in their Social Security salary.
But while your goal may be to delay your Social Security application for as long as possible, or at the very least wait for FRA to receive benefits, you may want to plan on claiming them by age 62. This is why.
You may not get a choice
Some people have the intention of working well into their sixties or beyond. But life doesn’t always go that way.
You could lose your job in your early 60s, after which you may struggle to find a new one due to circumstances beyond your control (particularly ageism, which is illegal but difficult to prove). Or your health may start to decline in your early 60s, forcing you to work fewer hours or even out of the job market altogether.
Therefore, in the course of your retirement planning, it’s actually a good idea to assume that you’ll need to sign up for Social Security at age 62 and lock in a lower monthly benefit for life. If you go with that assumption and ramp up your savings in light of this, you are better able to deal with unwanted surprises that come your way, such as having to end your career earlier than expected.
This doesn’t mean you should, of course actually claim social security at age 62. If your job is stable by the time you reach that age and your health allows you to keep it up, working longer and delaying applying for benefits can be a very smart financial move.
Rather, the point is that you should not assume that you will receive the same generous amount of Social Security benefits that you qualify for. Instead, to play it safe, assume you’re stuck with a lower advantage so you can plan accordingly.
Don’t rely too much on Social Security
Regardless of what age you can claim Social Security, one thing you need to know is that your benefits will only replace a modest portion of your pre-retirement income, and you should definitely plan to have other income to supplement them. So even if you’re confident you can claim Social Security at FRA or beyond, it still pays to save yourself.
There is no such thing as having too much money for your retirement. And so if you’re pushing yourself to save on the assumption that you’re only looking at a lowered advantage to end up scoring an increased advantage, that’s still not a bad situation to end up in.