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Is 62 a Good Age to Claim Social Security?

Because 62 is the earliest possible age at which to claim Social Security, it's the most popular age to file for benefits. But there's a downside to taking Social Security at age 62: Doing so will permanently slash your monthly benefits.

Your Social Security benefits are calculated based on your income in the 35 highest-earning years of your career. Once your base benefit amount is established, you'll be eligible to collect it in full, provided you wait until full retirement age (FRA), which is determined by your year of birth. For workers who are near retirement now, FRA is 66, 67, or somewhere in between, which means that if they take benefits before then, their payments will get cut.

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So is 62 a good age to file for Social Security? In some cases, yes, but not all.

Reasons to file at 62

In some situations, it might actually pay to file for benefits early, even if that means taking a benefit reduction. One such scenario is if you've saved adequately for retirement and don't actually need Social Security to pay your bills and would rather use it for travel or other leisure activities. If your nest egg is in great shape, or you have another source of steady income in retirement, then you might as well claim your benefits and enjoy yourself while you're younger. After all, you're bound to have more energy at 62 than at 70.

Here's another good reason to claim Social Security at 62. If you've lost your job or can't work, and you need the money to cover your basic living expenses, it's better to cut your benefits than to take on debt. Say your FRA is 67 but you file for Social Security at 62. Taking benefits five years early will result in a 30% reduction, but if the amount you end up with is enough to keep you out of debt, it's a worthwhile sacrifice to make.

Reasons not to file at 62

Just as there are plenty of valid reasons to take Social Security at 62, there are many situations in which it doesn't make sense. For example, if your plan is to take your money early and invest it, you're probably better off waiting until FRA and collecting your benefits in full. Yes, your returns might outweigh the hit to your benefits, but by going this route, you're taking on investment risk for no real reason.

Furthermore, if you pass away and leave survivors behind, their benefits will be based on the amount you collected. If you reduce your payments by filing early, you'll lower the amount your survivors are eligible for. And that could be a huge blow if you have a spouse who outlives you by, say, 15 or 20 years.

Finally, claiming Social Security at 62 can have seriously negative consequences if you're counting on those benefits to serve as your primary (or, worse yet, only) source of income. Back in 2014, more than 60% of beneficiaries received more than half of their retirement income from Social Security. And given that over 40% of older workers nearing retirement today have yet to save a dime independently, slashing those benefits could be a major mistake if you're counting on them to pay the bills.

Also consider that Social Security is already doing a pretty terrible job of keeping up with seniors' living expenses. From healthcare to housing to everything in between, retirees are spending more money each year just to maintain their basic standard of living, and the meager cost-of-living adjustments they've been getting out of Social Security haven't come close to keeping pace with inflation. If you're among the countless Americans who will inevitably rely on those benefits to stay afloat, filing at 62 and reducing your payments could compromise your long-term financial security.

The decision to file for Social Security isn't one to be taken lightly. There are consequences to taking benefits at age 62 -- or any other age, for that matter -- so be sure to weigh the pros and cons before pulling the trigger.

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