I Just Turned 62. Should I Claim My Social Security Retirement Benefits Now?
I get this question a lot. Unfortunately, there is no simple answer. Claiming Social Security retirement benefits before your full retirement age (FRA) has its pros and cons, depending on your situation. Here are reasons why some people might choose to claim benefits early:
Get Benefits Sooner: Claiming benefits before full retirement age means you start getting Social Security money earlier. This can help if you need money right away, especially if you have money problems or unexpected bills. Taking benefits early can give you additional regular income to help with those expenses.
Health Situation: If you're in poor health, or think you might not live very long, it could be smart to claim benefits early.
More Total Payments: If you expect to live an average life expectancy, the total money you get from Social Security could be similar whether you claim early or at full retirement age. If you can invest the early benefits and make more money than waiting, claiming early could be a good idea.
But there are also down sides to claiming your benefits early:
Smaller Monthly Payments: The biggest drawback is that your monthly payments will be permanently smaller compared to waiting until full retirement age. You could get 25-30% less.
Earnings Limit: If you claim benefits early and still work, there is a limit on how much you can earn without reducing your monthly benefits. If you are younger than your FRA and your earnings exceed $21,240 in 2023, Social Security will deduct $1 from your monthly benefits for ever $2 you earn above the income limit. If some of your monthly retirement benefits are withheld, you will receive them back beginning at your full retirement age.
Effect on Survivor Benefits: If you're married and claim early, it might affect how much your spouse gets in benefits after you pass away.
Long-Term Planning: Getting benefits early without thinking about your whole financial situation over the long-term could result in you not having enough money later in retirement.
Deciding when to claim Social Security is based on your financial situation, health, how long you expect to live, and your overall retirement plans. It's a complex choice, and it's good to talk to a financial advisor or use special calculators to figure out the best thing for you.
Have questions concerning your own Social Security claiming decision, give us a call. We can help.