Taking benefits at an earlier age might work to your advantage.
There’s no single age for signing up for Social Security. Rather, once you turn 62, you can sign up at any point.
You’re entitled to your full monthly Social Security benefit based on your personal earnings history once you reach full retirement age, or FRA. FRA is 67 if you were born in 1960 or any time after.
If you sign up for Social Security prior to FRA, your monthly benefit gets reduced permanently. If you delay your filing past FRA, your monthly benefit gets a permanent boost up until age 70.
If the idea of getting more money from Social Security sounds great to you, then delaying your filing might seem like the obvious choice. But here are a few ways you might benefit by filing for Social Security at an earlier age.
1. You can use your benefits to start a business
If you’ve had a small business idea you’ve been hoping to pursue but have been held back by a lack of funding (or a desire not to take out a loan and owe money on it), then claiming Social Security on the earlier side could be your ticket to kicking it off. You can use your benefits to cover start-up costs, materials, and whatever else you need to bring that idea to life.
Now if you claim Social Security before FRA, you’ll take a hit on your monthly benefit as mentioned earlier. But you might end up generating enough revenue from your business to more than make up for that. And you’ll get the personal satisfaction of knowing you made your idea happen.
2. You can use your benefits to pursue goals that hinge on your being in good health
You never know what your health is going to look like as you age. If you have goals you’re eager to meet that require you to be in decent shape or have good health, then filing for Social Security on the earlier side could be what it takes to make them possible.
Let’s say you’ve always wanted to hike the Appalachian Trail from end to end. If you’re 62 years old and in good enough shape to do that, there’s no guarantee that the same will hold true in your late 60s. If filing for benefits allows you to retire early or take a break from work to pursue that hobby, then it may be worth forgoing a boosted benefit.
3. You can enjoy a career change
Maybe you spent your entire life working as an accountant and are itching for something more creative to do. Going from accounting to being a chef could result in a sizable pay cut. But if you claim Social Security on the earlier side, you can use your benefits to supplement your missing income, all the while getting to experience a totally different career you find rewarding.
It’s easy to see why you might be tempted to delay Social Security. The idea of getting a higher monthly benefit throughout retirement is certainly appealing in its own right. But claiming benefits sooner might work to your advantage, so consider the upside of not holding off, too.