When You Might Want to Take Social Security Early

Most people decide to start receiving Social Security benefits when they turn 62, or when they stop working, if they’re older than 62. Social Security’s own statistics show that 70% of the 42.4 million retirees get reduced benefits, because of taking them before their full retirement age, according to a recent article aptly titled “Why You Might Want to Take Social Security Early” from Government Executive. While there are plenty of reasons to take Social Security as late as possible—as late as 70—there are also reasons why it makes sense to take it earlier.

The biggest one, is if you can’t afford to retire without claiming your benefit. There’s no need to sacrifice your financial security early on in the hope that you’ll get a big payout later in life. However, you should do those calculations carefully. A Social Security benefit along with other retirement sources, like a federal retirement benefit for federal employees, might provide adequate income. Just make sure that you’re balancing all the funds you are withdrawing and be mindful of taxes on those withdrawals.

Social Security benefits are a little more tax-friendly than withdrawals from traditional retirement savings. Delaying Social Security and increasing the withdrawals from retirement savings a little between the ages of 62 and 70 might lead to lower tax bills in your later years.

Another reason to take your benefits early, is to help family members receive benefits based on your work record. A spouse or child could receive a monthly benefit of up to half of your full retirement benefit, if they qualify. If your spouse does not have an earned Social Security benefit of their own, or if their benefit is smaller than half of yours, it may be helpful for you to claim early.

The Social Security Administration reports that of the 25 million women age 65 or older who were receiving benefits as of December 2017, 52.2% of them were entitled solely to a retired-worker benefit. About 26.5% were entitled to both a retired-worker benefit and a wife’s or widow’s benefit, and about 21% were receiving wife’s or widow’s benefits only.

Note that payments to your family do not decrease your own retirement benefit. The value of the benefits your family may receive, when added to your own benefits, may help you decide that filing early for benefits will be better.

A widow or former spouse can explore what benefits their deceased or ex-spouse has earned. In some cases, you may be able to apply for retirement or survivors benefits now and switch to a higher benefit later. If you are already receiving retirement benefits, you can only apply for benefits as a widow or widower, if the retirement benefit you receive is less than the benefits you would receive as a surviving spouse.

If you were born before January 2, 1954 and have already reached full retirement age, you have the choice of receiving only your current or divorced spouse’s benefit and delay claiming your own retirement benefit. If you were born after that, the option to take only one benefit at full retirement age is no longer available. Therefore, if you file for one benefit, you will effectively be filing for all retirement or spousal benefits.

Reference: Government Executive (July 18, 2019) “Why You Might Want to Take Social Security Early”