3 Situations Where Claiming Social Security Early Could Actually Make Sense
Key Points
Claiming Social Security early reduces your monthly benefits for life.
There are some scenarios where an early claim isn't a bad idea.
Filing early could end up putting more lifetime income in your pocket or serve another important purpose.
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There's a reason Social Security recipients are often advised not to file for benefits before reaching full retirement age. If you file early, you'll generally reduce your monthly checks for life.
Full retirement age for people born in 1960 or later is 67. But you can claim Social Security as early as age 62. That means you have a good number of years to make an early claim.
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Despite the fact that filing early results in smaller monthly Social Security checks, it's not always a bad idea. Here are three scenarios where it could make a lot of sense.
1. Your health is poor
While claiming Social Security early might reduce your checks on a monthly basis, it could end up giving you a larger lifetime benefit if you have a short life expectancy. If you have health issues that make so you're unlikely to live past your early or mid-70s, an early claim lets you start benefits sooner, potentially leading to more lifetime income.
2. Your job is miserable
Some people are fortunate enough to love what they do. If you're in the opposite boat, and your job is terrible, claiming Social Security early could be your ticket to escaping a bad situation a few years ahead of schedule. Depending on the specifics of the situation, being able to retire from your job early could help you preserve your health.
3. You don't really "need" the money
Some people don't manage to save for retirement and therefore need all of the Social Security they can get to cover expenses. But if you have a gigantic nest egg, you may not need Social Security the same way. And if so, you may want to claim benefits early so you can use the money at a time when your health is strong.
Say you have a $3 million IRA to cover your retirement expenses. That may be more than enough to pay for essentials, but you might still need extra money to cover travel and experiences. If Social Security can serve as that extra cash, and you're in great health when you first become eligible for benefits, it could pay to file then and really make the most of that money.
For many older Americans (particularly those with no savings), claiming Social Security early is a poor choice. But if any of these situations apply to you, you may want to take benefits ahead of full retirement age, even if it means resigning yourself to smaller monthly checks.
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