5 times it makes sense to claim social security early
Many people think that claiming Social Security benefits as early as possible – who is typically 62 years old – is inherently bad, because claiming before full retirement age means lower monthly payments.
However, the reality is that everyone’s circumstances are different. For some retirees, it makes sense to start claiming benefits as soon as possible.
Here are some situations in which you should not delay claiming your Social Security retirement benefits.
1. You have a short life expectancy
The amount of your monthly Social Security retirement benefit payment is based on an actuarially neutral formula. Essentially, this means that you should receive the same total amount of benefits over the course of your life, regardless of the age at which you start claiming them.
In other words, if you apply before your full retirement age as determined by the Social Security Administration, you will receive lower monthly payments over a longer period of time. If you delay your application until you are older, you will receive larger payments over a likely shorter period.
If you plan to have a short life expectancy, it might be better to start taking the smaller monthly benefit as soon as possible.
Money Talks News founder Stacy Johnson details such a situation in “2-Minute Money Manager: Should I Wait To Take Social Security?” He writes:
“A few years ago one of my best friends asked me if he should retire sooner, and I said, ‘Damn it, yeah. Why? Because he was not in great shape, from a health point of view. Both his parents died young, his siblings died young, and he was in dire need of the money. So my advice to him was, “Take it as soon as you can get it. He died a year later.
2. You need the money
You might also need the cash right away to get your living expenses under control.
“You’d be surprised how many people end up retiring before they want to,” says Devin Carroll, founder of the blog Social security information. “There are many reasons – including being made redundant or facing health problems – you have to stop working. “
However, remember that the age at which you apply determines the amount of your monthly benefit in the future. In other words, the longer you can defer claiming, the greater the benefits you will receive each month after your claim.
So if that’s okay with you, explore other ways to generate additional income first, which allows you to defer the claim. For example, see articles like “21 ways retirees can make extra money in 2021. “
3. You have children at home
“More and more people are turning 62 and still have minor children at home,” Carroll notes.
When this is the case, claiming your Social Security benefits early makes sense as it usually allows you to apply for additional benefits to help you care for minor children. This is because you must apply for your retirement benefits before you can apply for dependents’ benefits.
4. A high-income spouse has health problems
It’s a bit morbid, but when you decide to start collecting Social Security benefits at 62, you also have to think about when your spouse might die – and how much they earn compared to you.
One situation to consider is when the most earning spouse has medical issues, Carroll says.
This is because after the death of a spouse, you may be entitled to survivor benefits (also known as widow’s or widower’s benefits) depending on the spouse’s social security. And if your spouse has a short life expectancy and you know your survivor benefits would be greater than your own full retirement pension, there may be no reason for you to wait for your full retirement benefit.
To learn more about this topic, see “Social Security Q&A: How do spousal benefits work? “
5. A low-income spouse is older than you
Maybe your spouse earned a lot less than you during your working years.
“Their own advantage will be less than yours,” Carroll says. “In fact, their benefit might even be lower than the spousal benefit they would receive based on your income. “
However, as with benefits awarded based on your own employment history, your partner can only apply for a spousal benefit based on your employment history after you have deposited your own pension benefits.
Add up the cumulative benefits, suggests Carroll. You may find that your total monthly income is better when you apply for the benefit earlier and your older spouse chooses to receive the spousal benefit.
A final word: Work with an expert
Before making any decisions, however, be sure to do the math and compare your options. Social security rules are complex and situations vary.
Also consider reviewing your situation with a representative from the Social Security Administration or knowledgeable retirement planning professional.
At the very least, you could get a personalized analysis of your claims options from a specialist firm like Choice of social security.
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