Filing at the age of 62 could be extremely tempting. Social Security will reduce the amount of your payment by up to 30%. Therefore, here is the first reason why you should not apply for retirement at 62. You’ll simply get less money.
Retirement can be a time when you have no mortgage. However, you may have additional expenses that you did not use to have in the past. Take for example the money you will need for medical bills. Or all the money you want to have for traveling.
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MISSING OUT ON SOCIAL SECURITY’S REWARD
The second reason why you may not want to file for retirement benefits at 62 is not to lose 24% extra per month from Social Security. Bear in mind that those who file for retirement at 70 will get 8 percent extra per year after Full Retirement Age.
If you file at 62, your COLA increases will not be as high as if you filed at 67 or at 70. Even if all Social Security get the same percentage of COLA, the higher your payment, the more dollars you will receive. So, to receive higher Social Security increases, file for retirement late.
The third reason to file for retirement after the age of 62 is to have more time to save money. This is especially important if you have neglected your retirement savings accounts and your investments. Having five or even 8 years extra will make a big difference.
GETTING LOWER SPOUSAL BENEFITS FROM SOCIAL SECURITY
The higher your Social Security retirement benefits are the better. It is essential to know that your spouse and even dependent children may get benefits on your record.
If you file early, it will also affect the amount your spouse will receive. Although when people think about early retirement mainly think about money, there are other reasons to delay retirement.
For example, it will be good for you to keep active before you file for Social Security. Some people do not know what to do with so much free time and they find it hard to have a busy social life.