I would never claim Social Security at age 62 in this situation

Hopefully, Social Security will be one of the many sources of income available in retirement. For example, you might have some retirement income or withdrawals from an IRA or 401(k) that you’ve worked hard to save. You may also be interested in working part-time as a retiree not only to earn money but keep busy and relieve boredom.

But whether Social Security accounts for 30%, 50% or 80% of your retirement income, it’s important to sign up for benefits at the right time. This is because your filing age will determine how much monthly income the program pays you for the rest of your life.

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The youngest age to claim social insurance is 62. But you’re not eligible for your full monthly benefit until your full retirement age, which is years later.

If you were born in 1960 or later, your full retirement age is 67. And in this case, a claim at age 62 will leave you with a monthly benefit 30% lower than you would have paid five years later.

There are also financial incentives for delaying claiming Social Security past full retirement age. They run out after 70 years.

You may be eager to sign up for Social Security at 62 to get your benefits as quickly as possible. And in some cases, this move makes sense. But in a specific situation, the Social Security claim at age 62 could be reversed.

When you lose a world of lifetime income

You can decide to claim Social Security at age 62 and use the money to travel, start a business, or achieve another retirement goal you’ve set. And it’s not automatically a bad choice, despite the obvious reduction in your monthly benefit.

But there is one scenario where filing super early doesn’t make sense, and that’s when you have a combination of excellent health and a family history of longevity. In this situation, you may lose much of lifetime income by filing benefits as early as possible.

Let’s say you’re entitled to $2,000 a month from Social Security at age 67. Claiming benefits at age 62 means receiving $1,400 per month.

If you live to age 78 1/2, things will largely even out — meaning you’ll collect about the same lifetime benefit whether you file for Social Security at 62 versus 67. But if you end up living to at 88 years old. , then a Social Security claim at age 62 will cost you a total of $67,200 in lifetime income. If you live to 92, you lose $96,000 total. That’s a lot of money to give up.

Look at the big picture

You could easily justify losing a few hundred dollars a month in your Social Security checks if filing at 62 means using that money sooner. But you might be surprised at how much lifetime income you’re missing out on by taking benefits so soon.

So before you claim Social Security at age 62, ask yourself if there’s a trade-off. If you can wait even a few years, it could pocket that much more lifetime income.