Experts
often recommend postponing claiming Social Security. But there are situations
in which you should claim sooner.
Miranda Marquit • June 29, 2021
Many people believe that
claiming Social Security benefits as early as possible — which generally is age
62 — is inherently bad, since claiming before your full retirement age means
smaller 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.
Following are several
situations in which you should not put off 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 a formula that’s
meant to be actuarially neutral. That basically means you should receive the
same total amount of benefits over your lifetime regardless of the age at which
you start claiming them.
In other words, if you
claim earlier than your full retirement age as determined by the Social
Security Administration, you will receive smaller monthly payments over a
longer period of time. If you delay claiming until you’re older, you’ll be
getting larger payments over what is likely to be a shorter period of time.
If you expect to have a
short life expectancy, it might make more sense to start taking the smaller
monthly benefit as soon as you can.
Money Talks News founder
Stacy Johnson details one such 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 if he should take his pension early, and I said, ‘Hell,
yes.’ Why? Because he wasn’t in great shape, health-wise. Both of his parents
died young, his siblings died young, and he really needed the money. So, my
advice to him was, ‘Take it as soon as you can get it.’ He died one year
later.”
2. You
need the money
You also might need the
money immediately to stay on top of your living expenses.
“You’d be surprised at
the number of people who end up retiring before they want to,” says Devin
Carroll, founder of the blog Social Security Intelligence.
“There are lots of reasons — including being laid off or dealing with health
issues — that you have to stop working.”
However, remember that
the age at which you claim determines the size of your monthly benefit going
forward. In other words, the longer you can postpone claiming, the bigger the
benefit you’ll get each month after you do claim.
So, if that sounds good
to you, first explore other ways that you could bring in extra income, enabling
you to postpone claiming. For example, check out articles like “21 Ways Retirees
Can Bring in Extra Money in 2021.”
3.
You’ve got kids at home
“Increasingly, people are
reaching age 62 and still have minor children at home,” notes Carroll.
When that’s the case,
claiming your Social Security benefits early makes sense in that it generally
enables you to apply for additional benefits to help you care for minor
children. That’s because you must apply for your retirement benefits before you
can apply for benefits related to dependents.
4. A
higher-earning spouse has health problems
It’s kind of morbid, but
when deciding whether to start taking Social Security benefits at age 62, you
also need to think about when your spouse might die — and how much he or she
makes in comparison with you.
One situation to consider
is when the higher-earning spouse has medical problems, says Carroll.
That’s because, after a
spouse dies, you may become eligible for survivor benefits (also called widow’s
or widower’s benefits) based on the spouse’s Social Security. And if your
spouse has a short life expectancy, and you know your survivor benefits would
be more than your own full retirement benefit, there may be no reason for you
to wait for your full retirement benefit.
To learn more about this
subject, check out “Social Security
Q&A: How Do Spousal Benefits Work?”
5. A
lower-earning spouse is older than you
Maybe your spouse earned
much less than you during your working years.
“Their own benefit is
going to be lower than yours,” says Carroll. “In fact, their benefit might even
be lower than the spousal benefit they’d receive based on your earnings.”
However, as with benefits
issued based on your own work history, your partner can only claim a spousal
benefit based on your work history after you file for your own retirement
benefits.
Add up the cumulative
benefits, suggests Carroll. You might discover that your total monthly income
is better when you file for your benefit early and your older spouse elects to
take the spousal benefit.
A final
word: Work with an expert
Before making decisions,
though, be sure to work out the math and compare your options. Social Security
rules are complex and situations vary.
Also, consider reviewing
your situation with a Social Security Administration representative or a
knowledgeable retirement planning professional.
At the least, you could
obtain a custom analysis of your claiming options from a specialized company
like Social Security
Choices.
Disclosure: The
information you read here is always objective. However, we sometimes receive
compensation when you click links within our stories.
https://www.moneytalksnews.com/why-you-should-not-delay-claiming-social-security/
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