The good thing about Social Security is that you're not locked into a single age to file for it. Rather, you can file anytime between ages 62 and 70. In fact, you technically don't have to file at age 70, but there's zero financial incentive to delay benefits past that point.
Now, you should know that right in the middle of that eight-year window is your full retirement age, or FRA. That's the age at which you're entitled to your full monthly benefit based on your earnings record. FRA is either 66, 67, or somewhere in between, depending on the year you were born.
If you hold off on claiming benefits past FRA, you'll boost them by 8% a year up until age 70, when that incentive runs out. But if you file for benefits before FRA, you'll reduce them by a certain percentage for each month you file early.
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The greatest reduction you can face in your monthly benefits is 30%, which would come into play if you were to file at age 62 with an FRA of 67. On the other hand, if you were to file only a year before FRA, you'd lose just 6.67% of your benefits.
Either way, the initial monthly benefit you wind up collecting will generally be the amount you receive each month for life. The only exception is if you manage to undo your benefits application and repay the Social Security Administration (SSA) all of the money it paid you within a year. It's for this reason that many financial experts warn against claiming Social Security early. And in some cases, it's a very bad idea. But in these scenarios, it may be worth doing.
1. You've lost your job
Losing a job later in life can put you in a tough spot financially if you don't have enough savings to live on. That's because getting rehired when you're clearly showing signs of aging is easier said than done.
If you're out of work with no job prospects on the horizon, and you're looking at falling behind on your bills because of that, then it makes sense to file for Social Security, even if you're years away from FRA. While you will reduce your benefits in the process, it's far better to do that than to rack up costly debt during your 60s.
2. You have ample savings and won't be hurt by a lifelong reduction in benefits
Some people need their Social Security income to cover their basic expenses in retirement, like housing, transportation, healthcare, and food. But if you've adequately saved, you may not need those benefits the same way. However, you might want those benefits to enjoy your life while you're relatively young, and if filing for them early allows you to pursue lifelong goals while your health is optimal, then it pays to claim them ahead of FRA.