If you are a person and you are about to retire, a question will be there in your mind that is when should I start my Social Security? Although, there is no accurate answer for that question. It depends on your earning history and you savings amount with Social Security and many other factors. But it can be said that the more you wait the more benefits you can get.
But many people want to claim their benefits early because they worried about the future of Social Security. But is claiming early really the best choice?
What is the future of Social Security?
Recently, the future of Social Security is in the headline. The Social Security Administration (SSA) announced that the trust fund of Social Security may run out by 2033 if Congress does not make changes.
If this happens, the amount of money to pay out benefits will drop by 23%. This means retirees will see a decrease in their monthly checks.
So for that reason many people are worried about the future of Social Security. They are thinking that, they will not get their full benefits after a few years. That is why, they want to claim their benefits early.
What if you claim your benefits early at 62?
It is possible to start your Social Security benefits as early as 62. But you will face many losses in this.
For example, if your monthly benefit will be $1,500 at your full retirement age of 67, but claiming at 62 will reduce that amount to just $1,050 only.
It also can reduce your monthly benefits by an additional 23%. And many other chargers like the early claiming penalty. This means that you will end up losing more than a third of your original benefit.
Many financial experts recommend to wait until your full retirement age or until 70 to start claiming Social Security.
The reason is each year you wait to claim, your monthly benefit increases by 8%. This will make a huge difference over time.
For example, if you wait until 70 to claim your benefits. Instead of receiving $1,500 at 67, you can receive $1,800 or more per month. Plus, the longer you wait, the higher the cost of living adjustments (COLAs) will be. So this will benefit you more.
Waiting can also be a good idea if you are married. If you wait, you can increase the survivor benefit for your spouse. They will receive more if you pass away first.
When you should claim your benefits early?
There are situations where taking Social Security early can make sense. If you are in poor health and do not expect to live as long as the average retiree. In this case claiming at 62 can help you to get the maximum benefit which you deserve.
Similarly, if you have not saved enough for retirement and need the extra cash. In this situation taking early benefits will be necessary to cover your living expenses.
For some couples a strategy known as file and suspend can also work. This strategy involves one spouse claiming early to help pay for things like taxes or medical bills. While the other spouse’s benefits continue to grow until they turn 70.
What if you change your mind?
If you decide to claim Social Security at 62 but later regret it. There is some good news for you. You have 12 months from the time you start receiving benefits to change your mind.
During this time you can withdraw your application and pay back the money you received. And your benefit will continue to grow as you never applied.
Social Security is not going bankrupt anytime soon. But it is facing financial challenges. If you claim early, you risk locking in a permanent reduction in benefits. Which might hurt you in the long run.
On the other hand, waiting can significantly increase your monthly payout. And also ensure you have more financial security later in life.
The decision to claim early or wait should depend on your personal situation. There are many factors like your health, savings, work situation, and marital status. These factors can influence the time for your claim.
