Retire at age 62: Is it the best move for you?

Deciding when to start collecting Social Security benefits is a significant decision in your retirement planning. For many, the temptation to retire at age 62 is strong due to the prospect of securing early access to financial resources.

However, this choice requires careful consideration, as it may affect the total amount you receive over your lifetime.

To help, check out several factors that may make receiving Social Security benefits early a good decision for you.

Health concerns and shortened life expectancy

One of the most compelling reasons to retire at age 62 is health. If you have a health condition or family history that suggests a shorter lifespan, starting your Social Security benefits earlier might be a smart choice.

Benefits, once claimed, continue for life, but if you pass away earlier than expected, you may not receive as much as you would have if you had waited.

If you have concerns about your long-term health, it’s important to weigh the decision carefully. In some cases, taking Social Security earlier can provide the financial support needed for medical bills or treatments that may arise as you age.

You’re done working for good

Another scenario where deciding to retire at age 62 makes sense is if you’re completely done with your career. If you have already stopped working and no longer earn an income, Social Security benefits can provide the financial cushion needed for daily living expenses.

If you’re not working and don’t expect to earn more than the Social Security earnings limit ($22,320 in 2024), claiming early can help you avoid penalties and receive your payments without delay.

It’s also worth noting that if you are still employed after 62 and earn more than the limit, Social Security will withhold $1 for every $2 you earn above the threshold, which can significantly reduce your benefits.

Financial emergencies or layoffs

Another reason people choose to retire at age 62 is due to an unexpected financial emergency, such as losing a job or facing significant debt. If you’re at least 62 and find yourself in a difficult financial situation, starting Social Security early can provide a safety net.

You can use this money to get through tough times or even start a new phase of your life, without worrying about running out of funds.

In some cases, if you regain your financial footing, you can repay some or all of your Social Security benefits within the first year without penalty.

For individuals who are struggling with debt and have no other means to pay it off, retiring at age 62 and accessing Social Security funds could be a way to help manage those financial obligations.

Debt repayment often comes with high interest rates, and waiting longer to take Social Security might not be an option if you need immediate access to cash.

Taking benefits early can help reduce the burden of accumulating interest on loans or credit card debts. Additionally, consolidating debt and using the early payments to chip away at it can simplify the process, giving you the breathing room to recover financially.

You want to retire early and enjoy life

If you’ve always dreamed of retiring early, retiring at age 62 might be your opportunity to make that dream come true. Many people have goals for their retirement that involve pursuing hobbies, travel, or simply relaxing.

Starting your Social Security benefits early can provide the extra income necessary to enjoy this new lifestyle.

Maximizing spousal benefits

If you’re married, the timing of your Social Security claim also impacts your spouse’s future benefits. Retiring at age 62 may allow you to start receiving payments early, but it can also help maximize the survivor benefits for your spouse.

If one spouse has lower lifetime earnings, delaying the higher-earning spouse’s claim may be more advantageous.

The Trade-Off: Reduced monthly payments

While there are valid reasons to retire at age 62, it’s essential to understand the trade-off: your monthly benefit will be smaller. If your full retirement age is 66 or 67, claiming benefits at age 62 means you’ll receive 25% to 30% less each month.

For those who are still healthy and working, it might make sense to wait until your full retirement age or even until age 70 to start claiming Social Security. Waiting results in higher monthly payouts, which can significantly impact your overall retirement income.

However, since no one can predict how long they will live, some individuals may find it more beneficial to start collecting earlier rather than waiting for higher payments that might not be realized.

Is it right for you?

Ultimately, the decision to retire at age 62 depends on your personal circumstances. While there are several compelling reasons to start collecting benefits early—health issues, retirement plans, financial emergencies, or simply the desire to enjoy your golden years sooner—it’s important to understand the long-term financial impact.

Every situation is unique, and before making any decisions, it’s wise to consult with a financial planner to fully understand your options.

They can help you assess whether taking Social Security early is the right choice for you, considering your specific financial goals, health, and retirement plans.