Sixty-two is the youngest age at which you are eligible for Social Security retirement benefits. Since this is your first time getting your hands on this money, you may want to claim benefits when you reach this milestone.
Unfortunately, if you apply for benefits at age 62, you could end up with serious regrets. This is why.
Your monthly checks will be a lot smaller
If you claim Social Security at age 62, it is considered an early claim. In fact, it is the first claim you can make. And that’s a big deal when it comes to the size of your check.
Look, if you wait until you’re full retirement age, you’ll get benefits equal to a percentage of the average wage earned over the 35 years that your salary was highest. This payment is called your primary insurance amount (PIA).
But if you do not wait until FRA, you are subject to early filing penalties for each month claimed for it. These reduce your PIA. If you were born in 1956 or later, your FRA is between 66 and four months to 67. So a claim at 62 could be as much as five years early. Initiating checks under these circumstances would result in as much as 30% reduction in your primary insurance amount.
The reduction in your benefit applies for the rest of your life. As you get older and your medical care costs rise or your savings start to run out, you may regret cutting your payments by applying for Social Security early.
Your spouse could get into financial difficulties because of your decision
If you’re the biggest earner in your relationship, you don’t just affect the size of your own benefit if you claim Social Security at age 62.
See, partner benefits are there to provide for the spouse who lives the longest. Prenuptial agreements allow the surviving spouse to keep the higher of the two checks that come into the household at the time of death.
If you should have gotten a hefty benefit because you made a good income, but cut your Social Security check by as much as 30% because you claimed benefits at age 62 instead of waiting, your spouse’s survivor benefit could be up to 30% smaller than they otherwise would have been.
Now it may not matter if your partner had a similar salary to you or earned more than you, as their own retirement benefits would be equal to or greater than the survivor benefits you would leave behind. But if you were the main breadwinner, claiming 62 could be a regrettable choice if you’re wrestling your widow.
It’s important to think about these important things before applying for Social Security at age 62. You may decide you’re okay with a smaller check for life and don’t care about survivor benefits. But you have to make that choice consciously.
Otherwise, if you later discover that your decision has doomed you and your partner to get less money each month, that news may come as an unpleasant surprise that will leave you wishing you had made a different choice.
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