Want to claim Social Security benefits at age 62? Here are 3 risks to know.

If you're readying to pat into your Social Security benefits astatine property 62, marque definite you afloat recognize the risks earlier making your move. Golibtolibov/Getty Images

For galore Americans, Social Security is the cornerstone of status income. Nearly 90% of radical implicit property 65 person benefits from the program, according to the latest information from the Social Security Administration (SSA), and those monthly checks supply astir one-third of each status income nationwide for those implicit property 65. But portion the Social Security information nett is critical, when you take to assertion those benefits tin marque oregon interruption your fiscal representation aboriginal successful life.

While the SSA allows you to assertion Social Security benefits arsenic aboriginal arsenic property 62, waiting until your afloat status age, which is betwixt 66 and 67 depending connected your commencement year, oregon adjacent up to property 70, typically means you're getting a overmuch larger monthly payment successful return. Still, a important information of those eligible for Social Security benefits record astatine property 62, driven by either the tendency to discontinue aboriginal oregon the request for other income successful their aboriginal 60s.

The occupation with that, though, is that claiming excessively aboriginal comes with immoderate precise existent risks that tin person lasting fiscal consequences. So, determination are a fewer things you request to see earlier locking successful Social Security benefits astatine the earliest imaginable age.

Find retired however an annuity tin assistance capable successful the gaps near down by your Social Security benefits.

3 risks that travel with claiming Social Security benefits astatine property 62

While the thought of getting a cheque arsenic soon arsenic you're eligible mightiness dependable appealing, it's important to measurement the downsides carefully. Here are 3 large risks of claiming Social Security astatine 62:

Your monthly payment volition beryllium permanently reduced

When you assertion Social Security astatine 62, you're not conscionable taking a impermanent haircut connected your benefits. You're besides accepting a imperishable simplification that volition ne'er spell away. The Social Security Administration reduces your benefits by astir 6.7% for each twelvemonth earlier your afloat status age.

This means if your afloat status property is 67 and you assertion astatine 62, you'll person lone astir 70% of your afloat payment magnitude for the remainder of your life. Even much concerning, though, is that this simplification besides affects immoderate cost-of-living adjustments (COLAs) you person successful the future. Since COLAs are calculated arsenic a percent of your existent payment amount, starting with a smaller basal means smaller increases implicit time, compounding the fiscal interaction twelvemonth aft year.

Learn however an annuity tin assistance you fastener successful a guaranteed status income stream.

You miss retired connected delayed status credits

Perhaps adjacent much costly than the aboriginal claiming punishment is what you miss by not waiting until aft your afloat status age. For each twelvemonth you hold claiming benefits beyond your afloat status property until property 70, you gain delayed status credits worthy 8% annually. This means idiosyncratic with a afloat status property of 67 who waits until 70 to assertion volition person 124% of their afloat payment amount.

For idiosyncratic entitled to $2,000 per period astatine afloat status age, then, waiting until property 70 would effect successful monthly payments of astir $2,480, which is astir $1,080 much per period than you'd get by claiming astatine 62. Over a 20-year retirement, this quality amounts to astir $260,000 successful further benefits. These delayed status credits stop accruing astatine property 70, though, truthful there's nary payment to waiting beyond that point.

It could effect successful reduced subsister benefits for your spouse

Your claiming determination doesn't conscionable impact you. It tin besides person lasting consequences for your surviving spouse. When you die, your spouse whitethorn beryllium eligible to person subsister benefits based connected your net record. However, if you claimed aboriginal and reduced your ain benefits, you're besides reducing the imaginable subsister benefits your spouse could receive.

This is peculiarly problematic for couples wherever 1 spouse has earned importantly much than the other. The higher-earning spouse's claiming determination volition find not conscionable their ain benefits, but perchance their spouse's fiscal information by impacting their subsister benefits. In galore cases, the optimal strategy involves the higher earner delaying benefits to maximize some their ain payments and the eventual subsister benefit.

How to hold claiming your Social Security benefits

If you're tempted to record astatine 62 due to the fact that you request income, determination are applicable ways to span the spread until you scope afloat status age, oregon adjacent property 70, truthful you tin maximize your Social Security. Here's what to consider:

• Tap status savings first. Using wealth from a 401(k) oregon idiosyncratic status relationship (IRA) to screen the aboriginal years of status whitethorn let you to hold claiming and unafraid a bigger Social Security cheque aboriginal on. 
• Consider an annuity. Purchasing an annuity tin make guaranteed monthly payments that capable the spread until you assertion Social Security. This enactment provides income you tin trust connected portion allowing your eventual Social Security benefits to grow.
• Explore your location equity options. A reverse mortgage, for example, tin springiness you entree to your home's worth without requiring monthly payments, providing a fiscal span portion you hold claiming benefits. 
• Work part-time. If you're inactive capable and willing, scaling backmost alternatively of afloat retiring tin supply capable income to postpone claiming benefits without draining your savings.

The bottommost line

Claiming Social Security astatine 62 whitethorn consciousness similar the earthy adjacent measurement erstwhile you deed that milestone birthday. The determination comes with large tradeoffs, though, including smaller monthly checks, greater hazard of outliving your wealth and complications if you proceed to work. But delaying your benefits by adjacent conscionable a fewer years tin dramatically summation your fiscal information successful retirement. As you measurement your options, conscionable beryllium definite to support successful caput that a bigger Social Security cheque isn't conscionable astir much wealth today. It's astir bid of caput for decades to come.