For many Americans, age 62 is the most popular time to begin claiming Social Security benefits. That’s because it’s the earliest age you can start receiving retirement benefits. But just because it’s popular doesn’t mean it’s the right choice for everyone.
In fact, claiming Social Security early can significantly reduce your monthly benefit amount. This is a permanent reduction of 0.555% for each month. If your full retirement age (FRA) is 67 and you claim at 62, your benefit is reduced by about 30%. That’s why it’s crucial to take a comprehensive look at your retirement plan—what we call a 5-Factor Retirement Plan—and work with a CERTIFIED FINANCIAL PLANNER™ to determine the best strategy for your unique situation.
There’s no one-size-fits-all answer when it comes to Social Security, but there are a few scenarios where claiming early—right at 62—can be a smart move. Here are three:
1. You Have a Minor Child at Home
If you’re raising a child while nearing retirement, you may want to consider claiming Social Security at 62. Why? Because if you’re receiving Social Security retirement benefits and have a minor child (typically under age 18) living with you, your child may also be eligible for a benefit based on your record.
A child can receive up to 50% of the parent’s full retirement benefit—per child. If a parent has more than one minor child, those benefits can stack up fast (up to the family maximum cap).
For example, let’s say you claim at 62 and receive $1,400 per month (instead of $2,000 at FRA). Your eligible 10-year-old child gets $1,000 per month (50% of your FRA benefit.) Over the next eight years (until your child turns 18,) that’s $96,000 in child benefits. That extra income might outweigh the lifetime reduction to your own benefit, especially if you don’t expect to live well into your 80s.
This often-overlooked rule can make a significant difference in your family’s finances. While relatively rare, it’s a powerful reason to turn on your Social Security benefits early and one that even many financial professionals are unaware of.
2. You’re in Poor Health
Social Security is designed to provide lifetime income, and the longer you wait to claim (up to age 70), the higher your monthly benefit. But if you have significant health concerns or a shortened life expectancy, the math changes.
In this case, claiming benefits early may allow you to receive more over your lifetime simply because you’re starting sooner. If longevity is a concern, drawing Social Security at 62 can help maximize your benefits during the years you’re most likely to use them.
3. You’re a Widowed Spouse
If you’re a widow or widower who hasn’t remarried, you may be eligible for a special claiming strategy called a Restricted Application. This allows you to claim one type of benefit (such as your survivor benefit) while allowing your own retirement benefit to grow.
Why does this strategy matter? Your Social Security benefits increase by approximately 8% per year if you delay them beyond your full retirement age, up to age 70. Survivor benefits, on the other hand, max out at your survivor full retirement age (typically between age 66 and 67). When you claim the Restricted Application, this means you can begin collecting survivor benefits as early as age 60 to provide immediate income and let your own benefit continue to grow until age 70, then switch to your higher benefit for the rest of your life.
In many cases, starting your survivor benefit early—often as soon as possible— can be a smart financial move. But because the rules are complex and constantly evolving, it’s critical to work with a CFP® to ensure you’re optimizing this strategy.
Don’t Go It Alone
Your Social Security claiming strategy is one of the most important retirement decisions you’ll make. It affects your income for the rest of your life—and possibly your spouse’s too.
That’s why we recommend working with a CERTIFIED FINANCIAL PLANNER™ to evaluate your full retirement picture using a 5-Factor Retirement Plan. This ensures you’re not only making a decision based on age but also factoring in your spending, savings, investment risk level, and other income sources.
