Why It’s Not Worth Delaying Taking Your Social Security Until 70

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The age-old debate regarding Social Security is when to begin taking benefits. Although the so-called “full retirement age” for those born in 1943 or later is 67, retirees are given the option to begin drawing from Social Security as early as age 62, or as late as age 70. The longer you wait to begin benefits, the higher your monthly payout will be, and it will remain at that elevated level for the rest of your life. However, the most popular age at which retirees claim their benefits is age 62. So, what inspires all of these retirees to pass up a lifetime of increased monthly Social Security payouts? Here are some of the main reasons why it’s not worth delaying taking your Social Security until you’re age 70.

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The Future Is Uncertain

Probably the single biggest reason why you’d want to take your Social Security before age 70 is that the future is unpredictable. For example, there’s no way of knowing if you will develop any health issues between ages 62 and 70. Many retirees don’t want to find themselves in the uncomfortable situation where they delay their Social Security until age 70 only to find out that their life expectancy is cut short by some illness or disease. In that case, they would have forfeited up to eight years of payouts and might only have a few months or years left to receive them after age 70.

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The future of the Social Security program itself is also uncertain. The Social Security Trust Fund is expected to be depleted by the year 2033, and that time frame continues to shorten. Although this wouldn’t eliminate all Social Security payouts, it might very well reduce benefits. Grabbing what you can from Social Security while you can may end up being a sound strategy.

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You Might Drain Your Savings Too Fast

If you wait to draw your Social Security benefits until you’re 70, you’ll have to live off something in the meantime. Most people don’t want to have to work until age 70, so that means you’ll need to draw down your retirement savings to fund your lifestyle until your Social Security benefits kick in. If you begin tapping your nest egg at age 62, that means you’ll be draining your savings for a full eight years before you begin taking Social Security distributions. Depending on the status of your accounts, that could result in a significant hit to your retirement plan. If you draw $2,000 per month from your savings, for example, eight years later you will have taken out a whopping $192,000. If you begin taking Social Security payouts at age 62 instead, you could leave that $192,000 in your retirement accounts to grow for an additional eight years, actually increasing your nest egg rather than depleting it.

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You Want To Enjoy Your Early Retirement

If you’re in the enviable position of having accumulated a significant nest egg by the time you’re age 62, you might feel as if you’ve earned the right to an early retirement. In this scenario, taking your Social Security benefits as early as possible can be a win-win situation. By taking your Social Security payouts starting at age 62, you won’t have to rely on your savings to fund your entire lifestyle, potentially extending how long those funds can last. If your retirement savings are already sizable, adding Social Security payouts on top of your other withdrawals can make for a more enjoyable early retirement, as you’ll have additional funds to spend as you wish.

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You Need Help Paying Your Bills

If you haven’t been able to accumulate a significant amount for your retirement, taking Social Security as early as possible might be the lifeline that you need. An immediate boost to your income of $1,000 or more per month might help you to make ends meet. Plus, under Social Security program rules, you can actually continue to work while you’re drawing your Social Security benefits. Your benefits will be temporarily reduced, but they won’t be lost — you’ll get that money back in the form of increased payouts once you reach full retirement age. For 2021, benefits are reduced by $1 for every $2 you earn over $18,960 if you’re under full retirement age. Once you reach FRA, that reduction becomes $1 for every $3 you earn over $50,520. 

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