The golden rule when it comes to claiming Social Security is that you should wait until you reach your full retirement age in order to maximize the benefits you can receive.
You get paid more for waiting because the government calculates that you are likely to collect for fewer years. Each year you wait means an 8% increase in your monthly payout, up to your full retirement age.
For most people that’s 67 years of age, though you can increase your payouts even more by waiting until 70 under current law.
However, there might be situations when it might not make sense for you to follow that rule.
Let’s take a look at five situations when it might be a good idea for you to claim Social Security earlier, and even as early as 62.
You need the money
If you are not working or if you only work on a part-time basis, and if you do not have any other source of income to sustain yourself, pulling the trigger on Social Security might be your only choice.
If you are a blue collar worker, you might not be able to continue working until you reach your full retirement age due to the physically strenuous nature of your job.
In such a scenario, it is advisable to start collecting your social security benefits at 62, as the increased benefits might not be worth risking an injury or damaging your health.
You have a serious health problem
If you have a serious health problem and if you are concerned that you might not make it to 70, you should consider collecting your benefits as early as you can.
Playing the long game makes sense only if you expect to live a long and fruitful life. Moreover, if you are terminally ill, your social security benefits can help you pay for your own treatment and care, rather than burdening your family members.
You have large amounts of debt
This is one of the most common reasons why many retirees choose to claim their Social Security benefits as soon as they turn 62. If you have high interest debt (credit cards and other unsecured loans), claiming your social security benefits can help you pay it off.
Waiting until your full retirement age to add a few hundred dollars to your monthly benefit might not be worth it if you are paying hundreds of dollars towards minimum payments every month.
Your highest earning years are behind you
As you know, your payments are calculated based on your income (adjusted for inflation) during your 35 highest-earning years. If you are currently in your peak earning years, it makes sense for you to continue working for as long as you can, as it can boost your Social Security benefits significantly.
On the other hand, if your peak earning years are behind you, and if you currently need the money to pay down your debt or for any other reason, it might be a good idea to claim your benefits as soon as you reach the age of 62.
You are concerned about the future of Social Security
In a report released in 2019, the Social Security Board of Trustees warned that social security funds could become depleted by 2035.
While the chances of something like this happening are low, it cannot be brushed aside entirely.
If this is something that keeps you up at night, you might as well go ahead and claim the benefits while you still can.