Social Security money is guaranteed monthly income that can seem complicated to pass up once you become eligible at age 62. The intrigue is increased even more by the fact that you have likely been paying into the Social Security program for your entire working life, and retirement is right around the corner. However, just because you are eligible does not mean that you should begin collecting your Social Security benefits. There are consequences for collecting on your benefits before you reach 66, and if you have the ability, you may want to try and hold off on your Social Security.
When Should I Begin Collecting my Social Security Benefits?
There are several different factors to take into consideration when considering your collection of Social Security. Mainly, these factors are your health, your retirement future, and longevity. No one can fully predict their future health and finances.
However, if you are in good health and are financially capable of surviving without your Social Security benefits, waiting until the age of 66 can be far more profitable.
Waiting until you reach your Full Retirement Age or FRA can ensure your maximum benefit collection. In fact, the longer you wait past your FRA, the more you can receive. Prolonging your claim on your Social Security benefits can result in an 8% increase each year after you turn 66 or 67.
If you decide to begin your Social Security collection at the age of 62, you will be looking at a 30% reduction in your monthly benefits when you become eligible. If you can put off your claim until the age of 70, you could potentially be looking at a 24% higher monthly benefit claim.
Deciding when to begin your Social Security benefits claim can be a difficult one. If you have a significant amount of savings, if you have another form of income, if you are in good health, then you would want to put off your claim for as long as possible.
What Happens if I Need to Collect my Benefits Early?
While there may be a bigger payoff for waiting until the age of 70 to collect Social Security benefits, that may not be an option for some senior citizens. Some people need to begin claiming Social Security benefits as soon as they become eligible due to their poor health, inability to work, or their need for help covering their monthly bills.
Hypothetically, a person who begins collecting their Social Security benefit at the age of 62 due to disability will receive approximately $1,400 a month instead of the $2,000 a month they would have received if they had waited until their FRA age 66 or 67. This early collection penalty cannot be undone and will remain in effect for the remainder of the recipient’s life.
How Does Claiming Social Security Early Affect my Spouse?
If you are married, you can claim Social Security benefits based on your spouse’s career record. If you claim Social Security early, the reduction percentage of the benefit goes up to 35%.
Your choice to collect the benefits early may be something that your spouse has to live with long after you are gone. If your benefit is higher than theirs, your spouse will be able to claim your Social Security money as a ‘survivor’s benefit.’ However, if the benefit was cut down by 30%, it may not be enough for your husband or wife to live off.
Final Thoughts
Waiting to reach your full retirement age to receive your maximum Social Security benefits is well worth it. However, not everyone can wait that long due to health or financial issues. The insurance professionals at Lucas Retirement Group can help senior citizens prepare for retirement and plan for their financial futures. Lucas Retirement Group prioritizes their clients’ security and takes pride in helping and educating their policyholders.
How do I Learn More?
To learn more about the implications of collecting Social Security benefits early, contact the experts at Lucas Retirement Group. Our licensed professionals will be happy to answer any questions you have.
