Filing for Social Security at the age of 62 locks you into a lower monthly benefit for the rest of your life. That’s because, until full retirement age (FRA) arrives, you aren’t eligible for your complete monthly payment based on your previous earnings. And it won’t happen until your 66 or 67, depending on your birth year.
The Social Security Administration has released an update on how to prepare for the Full Retirement Age (FRA) when it comes. Filing for Social Security before FRA may result in a lesser benefit, which is not always desirable. However, it does make sense in certain situations. Here are some examples of when filing for benefits at 62 makes sense.
1. Healthcare is too expensive
Some people are able to obtain heavily subsidized health insurance through their employment. However, not everyone has the opportunity to join a company plan that is heavily subsidized. It’s possible that you’re self-employed and must find your own health coverage.
If you are having trouble paying for premiums, copays, and deductibles, claiming Social Security at age 62 might be beneficial. It may also help you avoid skimping on care due to financial constraints.
Keep in mind that you can’t become eligible for Medicare until age 65. You might end up paying less on health care if your current policy is extremely costly at that point. Claiming Social Security at age 62, though, might help you get by for a few more years while your expenses rise.
2. You want to make a change in careers while you are still young enough to work
Some people end up staying at the same career for years on account of its stability and financial security, even if it isn’t their ideal job. But what if you’re a 62-year-old accountant who has always wanted to find out what it’s like to be a musician?
Making that transition may be difficult. But if you claim Social Security early enough, your benefits may make up for the loss in income while allowing you to do what you’ve always wanted to do when you’re healthy and young enough.
3. You have a big enough nest egg to pay your essential bills
Claiming Social Security at age 62 may be a hazardous move if you’re in your early 60s with little financial resources stowed away. However, if you have a large nest egg and the cash from Social Security will mostly go toward things like leisure and travel, it makes sense to get that money as soon as possible.
In fact, if you’ve done an excellent job of saving your money over the years, you should be able to get Social Security as soon as you’re qualified. Perhaps you sacrificed significant vacations during your career in order to boost your 401(k) or IRA contributions. If that’s the case, now is the time to make up for it by collecting Social Security and traveling abroad when you have more energy.
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