Why You Should Collect Social Security Early

Find out how retiring early can benefit you and use this information to make an informed choice.

 

Your retirement planning likely includes getting some income from the Social Security Administration, but keep in mind that the amount you will receive depends on your age when you start collecting. Your full retirement age depends on when you were born. It ranges from 65 years old for people born in 1937 and earlier — to 67 years old for those born in 1960 or later. If you wait until after your full retirement age to stop working you can earn delayed retirement credits until you turn 70, which will increase your benefits even more.

There is no definitive answer to when you should collect Social Security benefits — and taking them as soon you hit the early retirement age of 62 might be in your best interest. Learn when to take Social Security early and next, figure out how to make the most of your benefits. Here are three reasons you should collect Social Security early.

1. You’re Planning Your End of Life Care
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1. You’re Planning Your End of Life Care

Your retirement age impacts your benefits and the government incentivizes waiting to collect Social Security by giving you a larger monthly amount. For example, if you start collecting benefits at age 62 when your full retirement age is 66, your monthly benefit will be about 75 percent of your full age benefit. So, if you expected your monthly benefit to be $1,000 per month at 66, you would receive only approximately $750 at 62.

Although a larger monthly benefit might sound great, you would have to wait four years to get that extra $250 per month. You would receive $36,000 during those four years at the reduced amount of $750 per month.

When you start collecting $1,000 at age 66, that extra $250 per month won't enable you to break even for 12 years if you collect early. If your health is declining and you don't expect to live until you're 78, you'll receive more in benefits during your lifetime if you start claiming as soon as possible.

Related: 21 Questions to Ask Yourself Before Deciding to Retire

2. You Need the Money Now
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2. You Need the Money Now

Even the best retirement financial plans and projections can go awry. For example, you might have planned on working until you're 70 so you could maximize your retirement benefits. If you get laid off at 62, however, and have difficulty finding another job, you might need to start taking your benefits just to get by.

Additionally, continuing to work in your industry simply might not be possible or healthy for you later in life. For instance, if you're a manual laborer, you might decide the risk of injury or other damage to your health isn't worth continuing to work and the health benefits you'll get by retiring could outweigh the smaller monthly benefit.

3. No One Else Is Relying on Your Benefits
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3. No One Else Is Relying on Your Benefits

A surviving spouse, minor or disabled children can receive money from the Social Security Administration based on the amount of your benefits. A surviving spouse can receive between 71.5 percent and 100 percent of your benefit amount, depending on his age, and a disabled child can receive 75 percent of your benefits each month even after you're gone.

If no one else can qualify for benefits based on your record, you might want to retire early because no one is depending on that money. If everything else falls into place and you meet the minimum Social Security retirement age, consider collecting your benefits and enjoying life.

Find Out: Must-Know Social Security Spousal Benefits Rules

Choose Your Right Time to Retire

There's no "one size fits all" answer for when to start taking Social Security benefits, and even people in similar financial circumstances will make different decisions based on their health and lifestyles. Make sure you understand the implications of taking Social Security before you reach your full age. Once you make your decision, figure out all the angles on how to retire early.

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