To help you decide what’s right for you, consider three big reasons to claim Social Security at 62, as well as two reasons not.
3 reasons to claim benefits at 62
Here are some of the top reasons to claim Social Security at 62.
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- You don’t have to worry about surviving your intended lifespan: Under the social security system, you will get the same benefits for life whether you claim them sooner or later as long as you live to your expected life span. If you survive the actuarial forecast, you will get more by deferring your claim. But if you die early, you will do better by claiming Social Security as soon as possible. If you claim Social Security at 62, you won’t have to worry about trying to beat the average.
- The purchasing power of services is eroding: Although cost of living adjustments (COLA) are built into the social security system to ensure that benefits do not erode, they are determined by a formula that is not a very precise measure of expenditure. seniors. Because they measure changes in the Consumer Price Index for urban and office workers, COLAs have not been high enough to keep pace with inflation in some key areas where people seniors pay most of their expenses. The result is that profits have lost about 30% of their purchasing power since 2000, and there is no indication that will change. If you want to start your benefits before inflation eats away at them further, it makes sense to claim them as soon as possible.
- You can get money while you are young and enjoy it: For many people, health problems start earlier than expected in retirement and prevent them from enjoying their money. If you’d rather claim Social Security while you’re still young enough to use your checks for travel or other fun things, it makes sense to start at 62. This can be especially true if claiming your benefits allows you to retire early when it would not be possible otherwise.
2 reasons not to claim 62
Here are two of the top reasons why a claim at an early eligible age may not be the best approach for most seniors.
- Benefit checks will be smaller: Claiming at 62 means accepting smaller checks for life, compared to what you might have received if you had waited. Sixty-two is before full retirement age (which is between 66 and 67 depending on your year of birth). This means that you will be hit with early deposit penalties if you start your benefits so early. You will also miss the chance to earn deferred retirement credits. Early deposit penalties can result in a substantial reduction in your checks, reducing them by up to 30% if your FRA is 67 and you claim at 62.
- Most retirees do better while they wait: While claiming early means you don’t have to worry about missing out on benefits if you don’t outlive your intended lifespan, the flip side is you to do you have to worry about missing out on benefits if you live longer than the actuaries predict. This is actually the most likely outcome, as about six in ten retirees would receive more benefits for life by waiting up to age 70 to claim them. Since Americans are living longer than ever, there’s a very good chance that you’ll get lost starting your benefits early.
At the end of the day, there is no one right answer to whether to claim at 62 or wait. If you’d rather get checks earlier or think you’ll die younger, starting your benefits at 62 is probably the best solution. But you might regret it if you live well to 80 and are stuck with little checks for life.
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