If you are not retired but are above the age of 62, deciding when to start receiving Social Security benefits can be a significant financial decision for those nearing retirement age. While you become eligible for Social Security benefits at age 62, the choice of whether or not to start receiving them at this age is not a one-size-fits-all decision. Here are some key factors to consider when contemplating taking Social Security at age 62.
First, it’s important to understand that taking Social Security at age 62 comes with a trade-off. You become eligible for benefits earlier, but the monthly benefit amount you receive will be permanently reduced compared to what you would receive if you waited until your full retirement age (FRA). FRA is determined by your birth year and typically ranges from 66 to 67.
One factor to consider is your current financial situation. If you need a source of income immediately and cannot rely on other assets or retirement accounts, taking Social Security at 62 can provide financial relief. However, if you have other sources of income, such as a pension, savings, or a part-time job, you may have more flexibility to delay Social Security.
Another crucial factor is your health and life expectancy. If you have reason to believe that your life expectancy is significantly shorter than average or if you have health concerns that may limit your ability to enjoy retirement fully, taking Social Security at 62 could make sense. Keep in mind that taking benefits early may result in a lower overall lifetime benefit, so carefully weigh this against your health and financial situation.
Consider your long-term financial goals and objectives. If you expect to live a long and healthy retirement and wish to maximize your Social Security benefits to ensure financial security in later years, waiting until FRA or even beyond can be a strategic choice. Delaying benefits past FRA can result in an increase in your monthly benefit amount through delayed retirement credits, up until age 70.
Additionally, marital status can influence your decision. If you are married and the higher-earning spouse plans to delay Social Security to maximize their benefits, the lower-earning spouse may consider taking Social Security at 62 to provide a source of income while allowing the other spouse’s benefits to grow.
Finally, it’s advisable to consult with a Fee-Only financial adviser who can help you evaluate your unique circumstances and make an informed decision. They can provide personalized analysis, consider your overall financial plan, and help you determine the optimal time to start taking Social Security benefits based on your goals and needs.
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