Though the full retirement age isn’t until between 65 and 67 (depending on when you were born), you can start collecting Social Security benefits at age 62.
It’s important to note that you’ll get more money if you delay your benefits past then, but also bear in mind that there are a number of perfectly valid, and even tactical, reasons to begin claiming Social Security early — i.e., right now, if you are eligible.
You Need the Money
There’s no need to sugarcoat — or shame — the reality. You may be in a situation where you just really need the money, and you’ve put years of hard work into the system in order to earn this money for your retirement. It’s totally fair to claim it as early as you can.
“Social Security can be the lifeline to make sure that bills are paid and debt is avoided,” said David Freitag, a financial planning consultant and Social Security expert with MassMutual. “Although the benefit is reduced for early filing, at full retirement, if the short-term financial need is gone, you could ask for voluntary suspension to restore some of the benefits lost.”
You Do Not Need the Money — and Never Will
Maybe you don’t need Social Security benefits — and never will. You might as well collect it and do something good with the money.
“For those who have large incomes from many different sources and do not need W-2-based income, the Social Security benefit can be directed to charitable giving,” Freitag said. “The Social Security income is passed along to any number of organizations that need financial support.”
You’re a Savvy Investor
There’s a way to approach collecting Social Security benefits ASAP with investment prowess, as Dr. Bob Wood, professor of Finance at the University of South Alabama, explains.
“Social Security benefits increase 8% per year between full retirement age and 70,” Wood said. “If your average investment return exceeds 8%, take the benefit and invest those funds. This may be easier than one would think; S&P 500 Index fund returns have averaged almost 9% over the past 20 years.”
You’re in Debt
If you’re steeped in debt at the age of 62, it might be wise to start claiming Social Security benefits now to begin making a dent.
“Individual debt, especially high-interest credit card debt, can significantly impact the budget for years in the future,” Wood said. “Using Social Security payments to reduce or eliminate this debt is a good idea.”
You Want To Transition to Part-Time Work
Maybe you’re ready to take things down a notch at work, but not entirely ready to hang up your hat or willing to take on a side hustle. Drew Parker, creator of The Complete Retirement Planner, points out that Social Security benefits can be a great way of augmenting your income.
You Want To Protect Your Retirement Investment Portfolios
Another significant — and perfectly valid — reason for taking Social Security right now is to avoid withdrawing more from investment portfolios to make ends meet.
“Given the current market conditions, that may lead to depleting [your] nest egg far quicker than anticipated,” said Dennis J. O’Keefe, CFP, of Successful Money Strategies, Inc.
You Have a Short Life Expectancy
This is a rather depressing one, but it must be highlighted: Not everyone will live into their golden years.
“Often medical issues happen that reduce life expectancy,” Freitag said, adding that is a “clear reason to start” taking benefits.
You Can’t (or Shouldn’t) Work Anymore
If only you could keep working until you’re good and ready to stop. Sometimes, things just don’t work out that way, and you could find yourself unemployed and unable to work at 62.
“You might have intended to continue working until 70 to maximize your retirement benefits,” said Steven Holmes, senior investment advisor at iCASH. “Nevertheless, if you lose your work at age 62 and have trouble finding another position, you could have to start using your benefits to make ends meet.
“Also, working in your field might not be feasible or healthy for you later in life. If your employment involves manual labor, you can decide it isn’t worth it to keep working [due to] the possibility of injury or other health problems. If you retire early in this situation, the healthier lifestyle you’ll enjoy might exceed the lower monthly Social Security payment.”
Your Spouse Is Eligible for a Larger Benefit
If your spouse is also in or near retirement, your Social Security situation could foster a “split filing strategy,” which creates the best of both worlds.
“You get a small benefit for day-to-day cash needs,” Freitag said, “while the higher earner allows benefits to grow with delayed retirement credits.”
You Have a Wide Age Spread With Your Spouse
Is there a significant age gap between you and your spouse? This may also hasten you into claiming Social Security benefits now. Again, it’s a bit morbid — but that’s life.
“Oftentimes, a younger spouse will start early to increase the family cash flow to enjoy things as a couple,” Freitag said. “When the older spouse dies, the benefit steps up to the larger amount and this larger amount continues to the younger spouse forever.”
Your Spouse Owns Permanent Life Insurance
If your spouse owns permanent life insurance, this could be a determining factor in your decision to claim Social Security now.
“Current cash value built up in a policy can offset the impact of early filing,” Freitag said, “and proceeds from future life insurance benefits can replace lost benefits one day in the future.”
You’re Worried About the Rumors
For years, rumors that Social Security is in jeopardy have been spreading. These aren’t baseless claims. Funds are being depleted and action does need to be taken soon in order for future beneficiaries to receive the same level of benefits. But, if you’re anxious that impending doom will happen sooner than later, you might as well claim your benefits now.
In any event, you shouldn’t lose sleep over it.
“For many years, naysayers and worrywarts have predicted the demise of Social Security,” Wood said. “Although supported by financial data, the Social Security benefit has traditionally been — and will continue to be, in my opinion — the sacred cow. Although changes for funding the program may occur, the politicos in D.C. realize that cutting the benefits of a huge number of voters is tantamount to political suicide. I don’t see it happening.”
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