If you delay claiming Social Security until 66 or 67 (depending on when you were born), you get a bigger check each month. Put off claiming until three years after you reach your full retirement age, and you will take home an extra 24% with each check.
It's possible, however, to claim benefits as early as 62. Doing so comes with a steep penalty -- you'll lose 30% of what you would collect at your full retirement age (66 or 67). But there are still scenarios where doing that makes sense.
Every person should consider their personal needs when deciding when to claim Social Security. These scenarios, however, are viable ones for electing to take benefits early.
1. You're not expecting to live very long
Delaying benefits until 70 makes sense if you expect to have a lot of healthy years ahead of you. If you're in bad health or have been given a bleak prognosis from your doctor, waiting may not make sense.
If you collect from 62-72, then pass away, you will have taken in significantly more money than cashing higher checks for two years after age 70. Nobody, of course, knows exactly when they're going to die, but if you don't have a great prognosis then claiming early may make sense.
2. You need the money
Retirement isn't always a choice. In some cases, you may find yourself out of work or underemployed before you planned to be. In this case, it's possible that you planned well for retirement, but expected to work for a few more years. You may not want to claim Social Security, but your unexpected circumstances might force your hand.
3. It's enough to retire
Some people want to retire to a life that's similar to the one they lived while working. Others plan to move someplace cheaper, downsize, and generally spend less money. If you know your retirement math, claiming Social Security at 62 may work for you.
This is not an easy decision to make. You should be very conservative and plan for a rainy day -- but if Social Security is only a small portion of your retirement income, then claiming early may be a viable strategy.
Run the numbers
Social Security should only account for a small percentage of your retirement. That number varies, but roughly 20% to 40% is a good rule of thumb.
It's very important to make a retirement budget. Consider where you will live and all of the expenses involved. After that, budget for things going wrong, and plan for prices to rise. You should also factor in that medical expenses could be higher than you expect, and that, in general, things will go wrong.
Consider your personal needs, hopes, and dreams. Factor in your health, expected lifespan, and any other personal variables. If you examine all of those factors and retiring early make sense, then go ahead and think about doing it. This is not a decision to make lightly, but it's possible that claiming Social Security at 62 makes sense for you.
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