Why Do So Many People Claim Social Security at 62?

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Social Security is an important source of retirement income. Unfortunately, if you claim Social Security too early, you can permanently reduce your benefits. But despite the fact retirees could face up to a 30% reduction in retirement benefits by claiming at the age of 62 instead of at their full retirement age, 62 remains a popular age to start receiving benefits.

Why do so many people claim Social Security at 62 and take the hit to their income that comes with doing so? Here are a few key reasons.

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1. 62 is the soonest benefits become available

The simplest explanation for why so many people claim Social Security at 62 is because they can't claim benefits any earlier. Many people count the days until they can get benefits because they need this money to leave the workforce or to survive comfortably if they've already been forced out of a job.

When health issues, family needs, or lack of job opportunities end your career early, there's a very good chance you won't have enough money to support yourself and your family. If you don't have enough and you can't work, it just makes sense to claim benefits the minute they become available.

2. It's hard to know if you'll break even if you wait to claim benefits

Another big reason for starting benefits early: It seems smarter to get benefits now than to hope you'll break even if you wait to claim higher benefits.

If you delay claiming Social Security benefits, you forgo years of income. Yes, the higher monthly benefits you get in the future will eventually make up for that -- but you'll typically have to live for more than a decade if you hope to break even. There's no guarantee of that.

Even if you do survive until your late 70s or early 80s, Social Security cost-of-living increases aren't keeping pace with rising costs seniors face, and the buying power of benefits is eroding. Plus, there's a concern that the Social Security trust fund could run short and benefits could be reduced, although that's unlikely.

With so much uncertainty about the future, it's no wonder many retirees decide to grab their benefits as soon as they can.

3. Retiring without Social Security is impossible for many seniors

Finally, another reason why so many people claim Social Security at 62 is that they decide they would rather get a smaller monthly benefit if doing so makes retiring early possible when it otherwise wouldn't be. Whether you're forced into early retirement or you simply want to leave work early, you may not be able to hand in your notice if you'd have to rely on savings alone.

Social Security provides 50% to 90% of income for 29% of current retirees, and provides 90% or more of income for 35% of current retirees, according to Vanguard. Most Americans simply don't have enough cash to rely on savings alone and would reduce their investment account balances too quickly if they tried to do so. If you want or need to leave work at 62 and you can't afford to do so unless you get Social Security benefits, chances are good you aren't going to wait.

Should you claim Social Security benefits at 62?

Many experts recommend waiting to claim Social Security benefits in order to maximize the income you'll receive. But ultimately, every person's financial situation is unique. You'll need to think about how important it is to retire early, whether you can retire early without Social Security benefits, and whether you have other options to support yourself if you leave the workforce before reaching your FRA.

If you want or need to retire early and claiming Social Security at 62 is the only way you can do it, go ahead and take your benefits when you're ready. Yes, you'll see a smaller income than you could have received if you waited, but you'll also get benefits for many years that you'd otherwise forgo -- and you may just decide that the smaller monthly benefit today is worth more than a higher monthly benefit in an uncertain tomorrow.

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