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4 Smart Reasons to Claim Social Security Early

By Wendy Connick - Sep 10, 2017 at 12:18PM

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Waiting to claim Social Security so that you can get higher benefits isn't always the smart financial move.

If you're eligible to receive Social Security benefits, you can start getting those checks as early as age 62. However, if you claim your benefits before you hit full retirement age, your checks will be permanently reduced in size. That leads many people to wait until their full retirement age -- or even later -- before they claim Social Security. However, waiting to claim your benefits is not always the best strategy. If any of the below reasons apply to you, consider grabbing those benefits on the early side.

1. You need the money

If you need the extra income now, not five years from now, then by all means claim your Social Security benefits as soon as you hit age 62. The alternatives -- selling excessive quantities of your investments, going into debt, or subjecting yourself to uncomfortable or even hazardous living conditions -- are considerably worse than a slightly reduced Social Security benefit.

If it's any consolation, remember that Social Security is designed to pay you the same total amount over your lifetime, regardless of when you claim benefits. If you choose to file early, you'll get smaller checks for a longer period of time. If you delay, you'll get bigger checks for a shorter period of time. In the end, it is theoretically a wash.

Social Security cards and money

Image source: Getty Images.

2. You're no longer working

When you claim your Social Security benefits before full retirement age and are still receiving a paycheck at that point, your Social Security benefits will be reduced if your earnings are higher than the annual earnings limit. This can result in a benefit so small that it's hardly worth taking. There is one bit of good news, though: Once you hit full retirement age, your benefits will be increased based on the benefits you forfeited due to your excess earnings. Still, it's generally best to wait to claim Social Security if you're earning enough to put you over income limit for the year.

3. You're in poor health

The penalty you get for claiming benefits early and the bonus you get for claiming them late are based on your expected lifespan. If you live exactly as long as Social Security predicts you will, then it doesn't matter when you claim your Social Security benefits; the total amount you'll receive will work out to be exactly the same. However, if you're likely to have a shorter lifespan than the actuaries predict, claiming your Social Security benefits as early as possible will net you more benefits over the course of your life than claiming them later. Thus, if you come from a short-lived family or have serious health issues, claiming Social Security early is the best financial move.

4. Your spouse is older and the main breadwinner

If your spouse has a much higher income than you and has not yet filed for retirement benefits, then claiming your Social Security benefits as soon as you can will generally be the best move. That way, your household will have some extra money coming in while your spouse delays their benefit and thus lets it grow. Because their base benefit will be larger than yours (Social Security benefits are based on your lifetime earnings), those delayed-retirement credits will increase their eventual benefit check by an even greater amount.

As an example, let's say your primary insurance amount (the monthly benefit you're entitled to receive when you claim Social Security at your full retirement age) is $1,000, while your spouse's PIA is $2,000. Assuming your full retirement age is 67 and you file at the earliest possible age of 62, then your benefits will be reduced by 30% to $700 per month. However, once your spouse reaches age 70 and finally claims their benefits, their monthly checks will be increased by 24% to $2,480. On top of that, you could then switch from receiving your own benefit to receiving a spousal benefit, which would be worth 50% of your spouse's PIA, or $1,000. In other words, once your spouse reached age 70, your household Social Security benefits would increase from $700 to $3,480.

If your lifetime earnings are similar to your spouse's, then this strategy won't pay off nearly as much. If not, though, then it can definitely pay to file early and let the household breadwinner delay their benefit until age 70.


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