One of the most common questions we hear is whether it makes sense to file for Social Security at age 62 rather than waiting until Full Retirement Age (FRA) or even age 70. While each individual’s situation is unique, it’s important to make an informed decision as part of retirement planning to help you reach your long-term goals.
The Cost of Filing Early
Filing for Social Security at 62 comes with a significant reduction in benefits—up to 30% less than what you’d receive if you waited until your FRA. That reduction is permanent, meaning you’ll be locking in a lower monthly payment for the rest of your life. While some argue that taking benefits early allows you to invest that money elsewhere, the tradeoff often isn’t worth it in the long run.
Additionally, if you continue to earn income while receiving Social Security before FRA, your benefits could be temporarily reduced. The Social Security Administration (SSA) applies an earnings test, which can further impact your monthly payments. You can read more about how earnings affect your benefits.
When Does Filing Early Make Sense?
There are some circumstances where filing for Social Security at 62 may be the right decision:
- Health concerns: If you have a shortened life expectancy, taking benefits earlier might maximize your total payout. You’ll want to take into account financial advice specifically for people with chronic or end-of-life illnesses.
- Immediate financial need: If you lack other income sources and need Social Security to cover expenses, filing early could be necessary.
- Spousal benefit planning: If your spouse has a significantly higher benefit and plans to delay filing until age 70, it may make sense for you to claim early while they wait for their maximum benefit.
Would potential Social Security reforms cause me to want to file early?
There has been much discussion about potential Social Security reforms, but history suggests that changes tend to focus on future retirees rather than those already claiming benefits or close to retirement. Looking at past social security reforms, adjustments have primarily come in two forms:
- Increasing the retirement age for younger workers – This means that future generations may need to wait longer to receive full benefits.
- Increasing taxation on Social Security benefits for higher-income retirees – A strategy used in Medicare reform as well, where higher-income individuals contribute more to the system.
Similarly, some members of the majority party in Congress have proposed reforms such as adjusting the FRA, modifying the benefit formula for future retirees, and phasing out benefits for high-income earners’ spouses and dependents. These discussions indicate that changes are being discussed but would primarily impact younger workers rather than those already near retirement.
The Bottom Line
For most people, waiting until FRA—or even later—results in a better long-term financial outcome. The penalties for filing early can be steep, and future Social Security reforms are unlikely to change this reality. If you’d like to discuss your specific situation, feel free to reach out to the Warburton team. Making the right decision about Social Security is critical to ensuring a financially secure retirement.
