Story by James Brumley
Even if you love your job, let's face it -- you'd probably still like to have the option of retiring early. Most of us don't have that option simply because we don't (or won't) have enough money to do so. We need to continue tucking away a portion of our wages for a while longer, or we need to delay Social Security retirement benefit payments so those eventual payments will be bigger, or both. There's actually a decent case to be made, however, for beginning your Social Security benefits at the earliest possible age of 62.
Minor reasons to start Social Security as soon as possible
For a long time, Social Security treated 66 as the full retirement age, or FRA. That's the age at which a beneficiary can receive 100% of their intended benefits. The number has been ratcheted up to 67 for anyone born in or after 1960 to reflect the fact people are generally living longer than they used to.
So if starting your Social Security retirement benefits before you've reached your FRA is an option, why isn't everyone signing up as soon as they turn 62?
There's a financial cost to taking benefits early. Indeed, the further away you are from your full retirement age when you claim, the smaller your monthly payments will be. For example, should you initiate your payments at the earliest possible age of 62, your checks will be on the order of 30% less than they'd be by holding out until you've hit your FRA of 67. That difference also doesn't take into account the possibility of waiting to claim until age 70, at which time delayed retirement credits would boost your monthly payments an additional 24% higher.
Initiating your payments at 62 years of age, however, still isn't a terrible idea for some people, for a handful of reasons. One of these reasons is obvious: You just need to. Whether failing health prevents you from working or bills just need to be paid (or a combination of both), postponing dealing with a problem often allows that problem to grow.
Another legitimate reason to claim Social Security as soon as possible is to maximize you and your spouse's net benefits while also minimizing your risk should one of you pass away earlier than expected. If minor children are in the picture, that's also a consideration.
The rules regarding spousal benefits are quite tricky, so be sure to discuss your options with a qualified financial professional. You can also discuss the matter directly with a representative of the Social Security Administration, although these employees can't help you with other end-of-life and estate-planning issues.
Yet another motivating factor for claiming Social Security sooner rather than later is the prospect of Social Security's pool of funds not being able to cover all of its intended payments in the foreseeable future. Depending on the estimate in question, a retiree's benefits could be reduced by 20% to 25% sometime in the mid-2030s. Starting your benefits as soon as possible means you'll be collecting all of whatever benefits you're due at your age ... at least for a few years.