Social Security has always been a typical American Rorschach test. Should you just take what’s offered or wait a few years for what’s behind the scenes?
Fortunately, you don’t have haunting visions of Monty Hall’s decision to claim your Social Security. There is actually a fairly reliable checklist through which you can determine whether it makes sense for you to start collecting your government pension as early as possible (ie, age 62).
Here are five reasons why it makes sense to do so:
#1: You Need Income
Face it, if you’re up against a wall and out of options for collecting money that will put food on the table, you should start receiving your Social Security funds as soon as you’re eligible.
Sally Mullins Thompson, principal/managing member, Sally Mullins Thompson CPA PLLC in New York City, says you should pull the trigger on Social Security. “If you’re not working and have no plans to look for a job, your Have little or no savings/investment/retirement funds, and have no other source of income, such as from a trust fund or inheritance. This will generally make for a very dire financial situation.”
Of course, the situation shouldn’t be so dire, but you may still be experiencing a gap between what you have and what you need.
“If you don’t have enough assets to cover the gap between your retirement savings, streams of income or other sources of assets in retirement and your retirement spending needs,” says Glenn Moore, CIO/CCO at Gordon Asset Management. LLC in Durham, North Carolina, “then it makes sense for you to take out Social Security so that you don’t put unnecessary stress on your retirement assets or your standard of living while deferring Social Security.”
#2: You have health issues
Beyond the crude math of not having enough income, there are other valid reasons to get Social Security early. These reasons tend to be very specific and often come with specifics that a simple written checklist can adequately cover. That’s why it makes sense to speak to a specialist who knows your specific circumstances to determine if these reasons apply to you.
The specialist who immediately comes to mind is your doctor. After the income requirement, your health status is most important in relation to your Social Security claim decision.
“Health is always a consideration,” says Chuck Czazka, founder of Macro Money Concepts in Stuart, Florida. “If you don’t think you’re going to live up to the normal mortality rate, it may make sense for you to start taking Social Security before age 70. Wait until age 70 to receive will make no sense. The more you can collect, the sooner that will pass away.”
There are really two factors at play here. Firstly, addressing your health issues may cost money, money is not yours. Second, there’s actually a “break-even” analysis that determines whether you should wait to claim Social Security. This is a guessing game but it is based on your life expectancy. In short, you need to live long enough to understand it (as in “dollars and cents”) so that you can defer.
“If you’re in poor health, you may need additional money that Social Security benefits provide—and you may want to claim benefits sooner rather than later,” says Oak View Law Group in Rocklin, Calif. Principal Attorney Lyle Solomon says. “And, unfortunately, if you believe that you won’t live too old, you may come out in your lifetime.”
#3: You and your spouse are both eligible, but…
If you are married then things get complicated. If both spouses can claim Social Security, the timing of those individual claims (as well as the age of each spouse) will affect the decision on when to start Social Security.
“If you have low Social Security benefits in a couple, and especially if you’re much younger than your spouse, waiting until the maximum age probably won’t do much for you,” says Jeremy Keel, a retirement-focused financial advisor. Says planner with Keel Financial Partners in New Berlin, Wisconsin.
Because of the variety of scenarios, here again it is best to speak with a professional who has experience advising couples on Social Security claim strategies.
John Hagenson, founder and managing director of Keystone Wealth Partners in Chandler, says, “In some cases, one spouse is waiting to claim spousal benefits, which requires the higher-benefit spouse to claim as well. is required so that the other can return to the other spouse’s benefit.” , Arizona. “Waiting on one in this situation can effectively wait on both of you if the spouse with the smaller benefit has little or no benefit on their own earnings record.”
#4: You’re Worried About Survivor Benefits
Somewhat related to the above is the complex concept of survivor benefits. The number and variety of variables involved here can be overwhelming, even if you have one of those “Social Security calculators” at your fingertips. Here’s an example.
“If you retire at age 62, your spouse is younger than you, and your spouse earns less than you, your Social Security benefit could very well be one day,” says Corey Bittner, co-founder and chief operating officer. Officials say Falcon Wealth Advisors in Mission Woods, Missouri. “If you believe it is likely that they will keep you alive, it makes sense to delay collecting your benefit, so the survivor benefit increases in value. If you have health issues and aren’t sure whether they’ll live to be older than you, it may be time to move on and start collecting those benefits. If your spouse earns less than you, it’s possible that the spouse pays their benefits don’t reach their maximum potential until you start sharing your benefits—which requires you to file for your own benefits. Spouse benefits don’t increase at full retirement age, so if your spouse is older than you If your spouse’s benefit is less than half of yours, then waiting to collect your Social Security may affect how many years your spouse is able to receive spousal benefits. It makes sense to open your work record to pay Rs. but your spouse is unwell, it may be wise to start collecting early. If your spouse dies before you, your benefits will cease when your spouse passes away, and you will begin collecting your spouse’s benefits. But you’re not going to collect the two. Delaying your own benefits and then delaying your spouse’s benefits so you can get a higher survivor benefit can go ahead and start collecting. ,
#5: You’re worried about the future of Social Security
There is an elephant in the room that no one wants to talk about, but that should be considered. Trustees who have overseen the Social Security program for years have been warning that it will go bankrupt sometime in the early 2030s. This will have a necessary impact on the ability of the government to deliver on its promise.
This is meant to be pure speculation at this point, but there are those who expect a reduction in profit. If this happens, future payments will be lower than currently expected. This scenario, in effect, devalues Social Security.
“Older people, especially those nearing retirement age, are concerned about the future of Social Security; Still, they are unlikely to be affected much,” Solomon says. “Still, if the prospect of missing Social Security payments keeps you up at night, it may be better to file early or at full retirement age rather than wait for a higher amount.”
The decision to claim Social Security should not be taken lightly. Even if you’re certain what you want to do, it’s best to review all options with your advisors because it’s almost impossible to ultimately reverse the decision you made.
“Once you start collecting Social Security, you’re locked into your payment amount for the rest of your life (with the exception of annual cost-of-life adjustments), so this decision is very important, ” says Susan Dover, founder of Social Security Resource Center in Philadelphia. “A good question to ask yourself is whether you can afford to live on low Social Security benefits for the rest of your life.”
One way to analyze the different scenarios is to discover the reasons to wait until age 70 before taking Social Security.