Key Points
The earliest age to sign up for Social Security is 62.
If you take benefits at 62, you’ll reduce them on a permanent basis.
Filing for benefits at 62 makes sense, according to one expert — with a disclaimer.
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Deciding when to claim Social Security can be tricky. Although the monthly benefit you get in retirement is based on your earnings history, your filing age will help determine how large or small it is for the rest of your life.
The earliest age to sign up for Social Security is 62. If you want your complete monthly benefits without a reduction, you’ll have to wait until full retirement age (FRA) to sign up. FRA is 67 if you were born in 1960 or any year after that.
You should also know that you can boost your monthly Social Security benefits by delaying your claim past FRA. Each year you wait gives you an 8% increase for life.
Since 62 is the earliest age to claim benefits, many people opt to file for Social Security at that time, despite the reduction in payments it causes. And some financial experts think claiming Social Security at 62 is a poor choice.
Dave Ramsey, however, thinks filing for Social Security at 62 could be a great idea. However, he feels that way under a certain condition.
Why Ramsey likes the idea of claiming Social Security at 62
Dave Ramsey’s mission is to help people of all ages attain financial security. For this reason, he would not suggest claiming Social Security at 62 if he didn’t believe that was a smart move.
The way Ramsey sees it, people can only collect Social Security for as long as they’re alive. If you claim benefits at 67 or 70 but only end up living until 73, you’re not going to end up with a very large total payday.
On the other hand, if you start collecting your benefits at 62, even if you’re getting a smaller amount of money each month, you’re “protected” in case you don’t end up living as long as you may have liked. You may end up with a larger total Social Security paycheck by virtue of filing early in that scenario.
Ramsey’s Social Security advice comes with this condition
While Ramsey is a fan of claiming Social Security as early as possible, he feels that the most prudent thing is to take benefits at 62 but invest them rather than spend them. Of course, not everyone can afford to do that. But if you sign up for Social Security at 62 and invest the money successfully, you could end up with a larger total payday than you’d get by waiting to file and locking in larger monthly checks.
The reality, of course, is that many people who sign up for Social Security at 62 do so because they have to retire and need the money due to not having savings. For this reason, a lot of seniors who claim Social Security early won’t be able to take Ramsey’s advice even though they might want to.
All told, it’s important to consider the pros and cons of claiming Social Security at 62 before you sign up. It’s nice to get your money sooner, but you’re locking in a smaller monthly benefit for your entire retirement — and that retirement could end up lasting longer than expected.
If you’re not sure when to claim Social Security, meet with a financial advisor for guidance. They can review your income needs, savings, and health to help you land on the right filing age for you.
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