You'll often hear that claiming Social Security at age 62 is a dangerous move. And it's easy to see why so many financial experts think that way.
You're not entitled to your full monthly Social Security benefit based on your income history until you reach full retirement age (FRA), which is 67 if you were born in 1960 or later.
If you file for Social Security at age 62, which is the earliest age to claim benefits, you'll slash your monthly paychecks by 30% if your FRA is 67. And seeing as how so many seniors enter retirement without a lot of, or any, money in savings, that's a dangerous financial hit to take.
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But while you may not want to sign up for Social Security at age 62 if you're low on savings, if the opposite holds true, age 62 may be the optimal time for you to file for benefits. Here's why.
It's all about making the most of your benefits
If you're sitting on a multimillion-dollar nest egg, it means that chances are, you worked hard and sacrificed throughout your career to get there. And so if you're in a strong enough financial position where you can afford a hit to your Social Security benefits, you might as well claim that money at a time when it can do the most for you.
Let's say you reach age 62 and you're in excellent physical health. Maybe there's a series of trips you want to take while you're still strong enough to hike for six miles a day or spend hours upon hours on your feet exploring interesting cities. If claiming Social Security at age 62 makes those trips happen, you deserve to snag that money and use it to do the things you've always wanted.
Granted, you can argue that you might be in good shape to take those trips at age 67. And waiting until then to claim Social Security could mean avoiding a major reduction in your benefits.
But you don't know what your health is going to look like five years down the road. You can hope that it's just as strong, but you just never know. On the other hand, if you're 62 years old and are in good shape now, then go with that — and take advantage of your solid health while it's still yours to enjoy.
Don't be afraid to slash your benefits
The money in your retirement plan might run out on you in your lifetime, even if you've saved a lot of it. Social Security, on the other hand, is set up to pay you your monthly benefit for the rest of your life.
But if you truly have a lot of money in savings and you manage your nest egg well, there's a good chance it will last as long as you need it to. And if claiming Social Security early means getting to check lifelong goals off of your list, it's a move worth making — even if it results in a lower paycheck every month throughout your retirement.
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