Reasons Why You Should Collect Your Social Security Early

The typical Social Security check amounts to about $1,500 monthly. However, if you retire at full retirement age, that amount increases to $3,000 a month (more on that shortly). You could collect Social Security early, but there will be unavoidable benefit reductions if you do that.

Over 50 million people are unemployed because of the pandemic. People protected from eviction by provisions in the CARES Act are soon to lose those protections. Food insecurity is on the rise in the United States as well.

There are many reasons why you may need to collect Social Security early. I’ll give you three reasons.

First, a primer on full retirement age benefits.

Full Retirement Age Benefits

Full retirement age is a term that refers to the age when you are first eligible for non-reduced Social Security benefits.

Most people begin collecting Social Security benefits between the ages of 62 and 70.

If you collect Social Security earlier than your full retirement age, specifically age 62 or earlier, then you can suffer significant monetary deductions.

Let me put it simply: If you were born in the year 1960, then your full retirement age is 67. If you were born after 190, then your full retirement age depends on your birth year.

And, the benefit reduction for collecting Social Security benefits early varies according to your birth year as well.

Social Security benefits are calculated based on how much money you made over a lifetime and your work record. Social Security payments last for as long as you live based on those metrics.

For example, if you were born in 1955, your full retirement age is 66 and 2 months. Try to collect Social Security early at age 62 and your benefits will be deducted by 25.83 percent.

If you were born in 1959, then your full retirement age is 66 and 10 months. Try to collect benefits at age 62 and you will suffer a 29.17 percent reduction in benefits.

Here is the link with a full retirement age table.

And here are three reasons why you could collect social security early:

  • Strategize a Staggered Claiming Strategy With a Spouse
  • Failing Health Requires You to Collect Early
  • Investment Strategies for a Better Return

If you start collecting Social Security benefits at the age of 66, you should get 100 percent of your benefits. Delay claiming your benefits until age 70 and your benefits increase by 8 percent with every year you wait.

Strategize a Staggered Claiming Strategy With a Spouse to Collect Social Security Early

Want to collect Social Security early? Consider the risk and reward benefits of claiming early as a married couple. Is it a good idea? It depends on which spouse makes the most bank.

Your best option may be to develop a staggered claiming schedule for benefits based on which spouse makes the most money.

Think about it. While the average retirement age is 62, your full retirement age status is ultimately based on metrics beyond your control.

For example, your full retirement age to receive maximum Social Security benefits is based on the year you were born.

So, if your full retirement age, or FRA, is 66, you could claim Social Security at age 62. Still, you could lose up to 30 percent of your benefits.

You must be thinking to yourself, “how is that a good thing?” Well, if your spouse makes more money than you and delays claiming benefits, both of you financially benefit.

If your spouse waits as long as practical to claim benefits, then you will both enjoy Social Security benefits over a longer time span.

If you make less money, your spouse’s benefits will kick in years after yours started. That translates to larger payments that will begin to supplement your reduced benefits payments.

Remember, the longer that you delay claiming benefits, your overall benefits increase 8 percent annually for every year until age 70.

Look at it this way: the average human lifespan is 78 years for men. Women usually live up to their early 80s. If you budget well, a staggered claiming strategy will help you maintain Social Security income for the rest of your life.

If you are living on a fixed income, this may be a better strategy than two spouses waiting years to reach FRA.

Failing Health Requires You to Collect Early

Did you know that the average retired couple will pay almost $300,000 for health care expenses throughout the duration of their retirement?

A 10-year term life insurance policy of $2 million would cost a 60-year old about $478 a month. A person in their 20s would pay tens of dollars a month.

Why does health care become so expensive as we age? Well, its because failing health, injury, and disease is more likely to manifest in advancing age than in youth, statistically speaking anyway.

Almost 22 percent of people over the age of 65 experience declining and progressively poor health issues as they advance in age. Cancer, heart disease, and chronic respiratory problems are the three main causes of death for people over the age of 65.                            

The point here is that you may need to collect Social Security early to deal with failing health problems.

Depending on your circumstances, you can apply for Social Security Disability Benefits if you are experiencing failing or life-altering health issues.

The problem here is that the Social Security administration has exacting standards of conditions that it officially recognizes as a, “disability.”

To qualify for early Social Security benefits, you can’t be employed in a job where you are making over $1,260 a month.

You must be suffering from significantly debilitating medical issues like:

  • Blood disorders
  • Cardiovascular conditions
  • Digestive tract problems
  • Immune system disorders
  • Neurological disorders
  • Mental disorders
  • Musculoskeletal problems
  • Senses and speech issues
  • Respiratory illnesses

If you don’t qualify for disability benefits, you can collect Social Security early and bear the benefit deductions. Keep in mind that if you die, any spousal survivor benefits would be reduced too.

Investment Strategies for a Better Return

Are you a savvy investor? If you think you know the pulse of the financial market, you can collect Social Security early to play the stock market.

If you have researched which stocks and/or companies to invest in, you can collect your benefits and try to improve on that 8 percent annual return.

Keep in mind that you will suffer reduced benefits for this privilege of this investing gambit.

Also, while the average return on investment is about 10 percent, it could be much lower. There is no guarantee you will make an appreciable ROI.

Additionally, it could you years to realize an ROI. Or, if you make the wrong investment, you could lose everything.

Think about it more than twice if you collect Social Security early for the purpose of investment gambling.

Get Advice

Before you try to collect Social Security early, talk to a financial advisor or an accountant. Talk to someone who has done it before.

Or, contact someone at the Social Security Administration.

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