3 Reasons It's Dumb to Take Social Security Benefits at 62

Because 62 is the earliest age at which eligible seniors can file for Social Security, it's also the most popular age to claim benefits. But generally speaking, the average American should not be taking those benefits that early. Here are a few reasons why taking Social Security at 62 is a truly bad idea.

1. You'll slash your benefits -- for life

Though your Social Security benefits are based on how much you earned during your career, the age at which you file for benefits can cause that number to go up, go down, or stay the same. If you wait until your full retirement age (FRA), as designated by the Social Security Administration, you'll collect your base benefit amount in full each month.

Now for today's older workers, FRA is either 66, 67, or somewhere in between, depending on your year of birth. So if, based on your earnings record, you're entitled to $1,600 a month in benefits at a full retirement age of 67, and you first file at 67, you'll collect your $1,600 in full. On the other hand, if you jump the gun on Social Security and claim benefits at 62, you'll lower those payments by 25% -- permanently. This means that instead of getting $1,600 a month out of the program, you'll end up with just $1,200. Given that Social Security serves as the sole source of income for almost 25% of Americans aged 65 and older, and many more seniors depend on those payments to stay afloat financially, a major benefits cut is something the average retiree just can't afford.

2. You'll lower your survivors' benefits

It's natural to focus on your own needs when thinking about when to take Social Security. However, what many older workers don't realize is that taking benefits early impacts not only them, but also their survivors.

Your survivors' benefits are based on the amount you collect, so if you file for Social Security at 62, thereby reducing your benefits by 25%, your surviving spouse, for example, will get 25% less income as well. And that could make a huge difference if your spouse ends up outliving you by several years.

3. There's still plenty of time to save Social Security

Many people rush to claim Social Security as early as possible because they fear the program is running out of money and won't pay benefits in the future. But that's not what's actually going on. According to the latest Trustees Report, the program's trust funds aren't set to run dry until 2034, which means that for the next 17 years, enrollees will continue collecting their full benefits as scheduled. Even if nothing is done between now and then to help make up for Social Security's impending shortfall, the program will still manage to pay 77% of scheduled benefits.

But that's really the worst-case scenario. And given that Congress has a good 17 years to come up with a fix, there's no need to panic just yet.

There's no "right" age for everyone

Of course, there are certain scenarios in which it does make sense to file for Social Security at 62. If you need extra income because you lose your job or fall ill, you're better off taking those benefits than racking up debt later in life. Similarly, if you have reason to believe you won't live very long, it pays to get your hands on those benefits as early as possible and use them while you can. Furthermore, if you don't actually need your Social Security income to pay the bills, but you want that money to use for travel and entertainment, you might as well enjoy it while you're still relatively young.

But unless one of these situations applies to you, you're better off waiting at least until your full retirement age to start collecting your benefits. Once you file for Social Security, there's no going back, and if you're among the many seniors who are counting on those benefits as a key source of retirement income, you should do everything in your power to avoid cutting them.

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