3 Reasons Why You Should Take Social Security Early
To wait or to take? That is the question when it comes to getting your Social Security benefits. The fact is, you can start receiving Social Security benefits at the age of 62 but at that age, you will not receive the maximum benefit. The longer you wait to start taking benefits, and the older you are, the more you’ll receive in monthly Social Security income.
Opting for reduced benefits can significantly impact your income over time. According to Fidelity, if you take Social Security before full retirement age, you can expect a 30% reduction in monthly benefits on average.
Americans who wait until they reach the full retirement age most likely enjoy the best Social Security scenario. But a 2021 Gallup poll indicates that many people leave the workforce around the age of 62, the youngest age you can begin claiming your government benefits.
But even knowing they could experience a 30% reduction in their monthly Social Security checks, retirees who opt to take benefits early aren’t necessarily heading down the wrong path.
If you’re thinking of taking your Social Security benefits as soon as you can, the following factors could help you make the decision that’s right for you. Yes, good things come to those who wait, but they also come to those who decide that now is the time.
How Much Debt Do You Have?
According to the Federal Reserve, Americans incurred up to $18.6 trillion in debt during just the first few months of 2022. Of that total sum, individuals between 55 and 64 carried an average debt of $97,290. Ouch.
Unsecured debt (we’re looking at you, credit cards with high interest) is a hit to budgets, no two ways about it. Why not use the government cash you’re entitled to help wipe out your outstanding debts? You can apply your Social Security benefits to debts that you’re looking to pay off, which is a definite plus when it comes to deciding when to start receiving your checks.
Are you concerned about your cash flow being too tight and managing your finances without a paycheck? You can work and still receive Social Security benefits, but only if you’ve reached full retirement age, around 66 or 67.
Does Your Spouse Earn Enough For The Both Of You?
Before making your Social Security benefits decision, consider this: If your spouse claims full Social Security benefits at retirement age, you can then claim 50% of their benefits. Taking an objective look at the numbers could help decide one way or another in terms of Social Security. If, for example, 50% of your spousal income is more than 100% of your income, it might make sense to retire and start receiving and living off of your spouse’s benefits.
How Is Your Health?
The 2021 Gallup poll revealed that health concerns are high on the list of those considering retirement. In particular, respondents were concerned about facing a serious diagnosis, undergoing major surgeries, or struggling with an ongoing disability or physical hardship. And Medicare benefits? They don’t go into effect until the age of 65.
Having a regular stream of income such as Social Security benefits could mean the difference between being able to financially manage medical necessities and finding yourself going into debt to cover medical bills. Good health is never a given, which means you might want to give more thought to taking Social Security benefits as soon as you’re eligible.