One of retirees’ most crucial decisions is deciding when to start collecting Social Security benefits. Delaying Social Security benefits to full retirement age or beyond increases your benefits; however, some reasons may compel you to take advantage of the benefits early.
The age many consider too early for Social Security benefits is 62. You can get your benefits at this age, but with a 30% reduction because you received them before your full retirement age, which can be 66 or 67, depending on when you were born. Despite this reduction, it might be necessary to get these benefits early for specific reasons.
Ten reasons you should take your Social Security Benefits early
Here are some reasons why you might need to take your Social Security benefit early
Health Issues
- If you have significant health problems or a shorter life expectancy, taking Social Security early can be a smart decision. Waiting for higher payments might not be beneficial if you aren’t likely to live long enough to reap the benefits of delaying. Those in poor health might benefit from early claims, as they may not live to the break-even point where delayed benefits surpass early ones. The break-even point is the age at which the total benefits received from delaying Social Security surpass those received from claiming early. Claiming early might be more advantageous if you’re not likely to live past this age.
Financial Necessity
For some, immediate financial needs outweigh the benefits of waiting. If you need income to cover living expenses, mortgage payments, or other bills, taking Social Security early can help provide the necessary financial relief. Many Americans opt for early benefits to address pressing financial needs, especially those without sufficient retirement savings.
Unable to Work
Physically demanding jobs or hazardous working conditions can lead to early retirement. If continuing to work is not viable due to physical constraints, claiming Social Security early allows you to retire without financial instability. Workers in strenuous jobs often claim benefits early to escape challenging work environments.
Lower Lifetime Earnings
Claiming Social Security early might make more sense if you are a lower-income earner. In households with significant income disparities, it’s common for the lower earner to claim early while the higher earner delays, maximizing overall household benefits. This strategy ensures the surviving spouse benefits from the higher earner’s delayed claim.
Concerns About Social Security Solvency
With ongoing discussions about the long-term sustainability of Social Security, some individuals prefer to claim early out of concern that benefits may be reduced or depleted in the future. Although this fear is often debated, many take what they can while it’s still available.
Survivor Benefits Strategy
An early claim strategy can benefit surviving spouses. If you’re a widow or widower, you can claim survivor benefits early and switch to your higher benefit later, maximizing your lifetime benefits. This flexibility is crucial for many in managing their retirement finances.
Investment Opportunities
Some retirees prefer to take Social Security early and invest the money, hoping to earn returns that exceed the delayed retirement credits. While this strategy requires a solid investment plan and understanding market risks, it can potentially increase your retirement funds.
Early Retirement Plans
If you have always planned to retire early and have adequate savings to support your lifestyle, claiming Social Security early can complement your retirement income. This choice aligns with personal retirement goals, allowing you to enjoy your retirement years sooner rather than later.
Family History of Longevity
Family health history can influence your decision. If your family has a history of shorter lifespans, taking benefits early ensures you receive them during your lifetime. Conversely, if longevity runs in your family, you might consider waiting, but an early claim can still be a safe bet for those with uncertain health outlooks.
Enjoying Retirement Sooner
Claiming Social Security early allows you to enjoy your retirement years sooner. This decision can enhance your quality of life by providing the financial means to travel, pursue hobbies, or spend more time with family. An early retirement’s emotional and psychological benefits can be significant, especially if you’ve spent decades in the workforce.
