When Does it Make Sense to Claim Social Security Early?


When Does it Make Sense to Claim Social Security Early?

Posted by Infinite Wealth Advisors, LLC
4 years ago | August 10, 2020

Everyone wants to maximize their retirement income, so you will often hear that you should avoid claiming Social Security until at least your full retirement age. At age 66 or 67 (depending upon your date of birth) you can claim your full scheduled benefits, and if you wait beyond those ages you can actually earn a slightly higher monthly benefit.

On the other hand, some retirees feel tempted by the opportunity to claim their Social Security benefits as early as age 62. Your checks will be permanently smaller, but up to 25 percent, but for some it means an earlier retirement. Is that trade-off ever worth it?

Actually, in some cases that might be an acceptable decision. Here’s why.

You have a serious or chronic medical condition. The statistics aren’t pretty, but they don’t lie. According to a 2014 study by Johns Hopkins University, 67-year-old retiree with no pre-existing chronic conditions will live another 22.6 years. On the other hand, that same person will live 7.7 fewer years if they have five chronic conditions.

Those are just averages, of course, and everyone’s situation will differ depending upon type and severity of medical problems. The point is that some of us can predict that we might have a shorter life expectancy than average. For those people, taking an earlier retirement can mean more time to enjoy those years.

You need, or are forced to, retire early. Before the coronavirus pandemic, a 2018 survey found that 37 percent of people planned to work past age 70. Now, we know that millions have been forced into unemployment, and we aren’t certain of what the future holds for those workers. Those over age 62 might feel tempted to go ahead and officially declare themselves retired, and draw Social Security, rather than compete in the recovering job market.

As an added factor, those who previously worked in crowded offices or with the public might be thinking twice about re-entering the workforce during a pandemic. As we battle a virus that appears to target older individuals and those with pre-existing conditions, a reduced Social Security check might feel like an acceptable trade-off for an early retirement.

If that’s the case for you, give us a call before you make the decision to officially retire. We can discuss your options and calculate your expected retirement income, and help you decide how to proceed.

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