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5 Reasons to Take Social Security Benefits Early at Age 62

Social Security is one of the most important sources of income for many retirees in the U.S. Deciding when to start collecting your benefits can be a complicated decision with many different factors. While delaying social security results in a larger monthly benefit, there are also good reasons to take your benefits early at age 62. Here are some of them: 

1. You have health issues

If you have a serious medical condition or a family history of early mortality, you may not live long enough to enjoy the benefits of delaying your Social Security. The rate of return on delaying social security benefits is deeply negative during the first decade of retirement. Thus, those who may not live into their 80s will be much better off taking benefits early as the following chart from the Nerds Eye View blog shows:

2. Partner’s life expectancy is short and you’ll adopt higher survivor benefits when your partner passes

If your partner is the higher earner and has a short life expectancy, you will maximize your overall benefits by taking your own social security benefits early and then switching to the higher survivor benefit when they pass. 

3. You want to maximize spousal benefits

If you’re married and have a lower earning history than your spouse, taking your Social Security benefits early can help allow your spouse to delay and maximize their benefits. However, If you take your social security benefit on your own work history early then your spousal benefit will be reduced in the future.

4. High Expected Investment Returns for Investable Assets

If you expect to earn a high enough return on your investable assets that you would otherwise have to tap early in retirement, then taking social security early will provide the highest expected lifetime benefit as the following chart from JP Morgan Asset Management shows:

5. Unable/Unwilling to Work and You Need the Money

If you retire before your full retirement age and have no other sources of income, you may need to rely on your Social Security benefits to cover your living expenses. Sometimes life is about more than just maximizing your finances!

Taking Social Security benefits early at age 62 is not for everyone, but it can make sense in certain situations. Before you make this decision, you should weigh the pros and cons carefully and consider how it will affect your overall retirement plan. You should also consult a financial advisor who can help you evaluate your options and optimize your Social Security strategy.

Scott Caufield, CFA, CPA