When it comes to claiming Social Security benefits, conventional wisdom may say that patience is a virtue. Waiting until your full retirement age (FRA) -- the age at which you'll receive 100% of your benefit amount -- or longer to claim benefits can result in bigger (but fewer) checks.
But most people choose to claim as early as possible. In fact, 48% of women and 42% of men who claimed Social Security in 2013 did so at age 62, according to a 2015 study by the Center for Retirement Research.
Although some people may claim benefits early because they simply don't want to wait another year, in certain situations, claiming benefits at age 62 can be more beneficial than waiting. Here are three such scenarios:
1. You plan on continuing to work at least part time
Many people assume they'll retire when they start receiving benefits, but you don't necessarily need to leave the workforce to start taking Social Security.
Working part time during retirement will help boost your retirement savings, so that you won't depend as much on Social Security benefits. You won't be receiving your full benefit amount each month as you would if you'd waited until your FRA, but the supplemental income from working part time will help make up for it.
Keep in mind, however, that you may receive a (temporary) cut in benefits depending on how much you earn. During the years leading up to your FRA, you'll have $1 deducted from your check for every $2 you earn above the yearly limit -- which for 2018 is $17,040. If you'll reach your FRA in 2018, your benefits will be reduced by $1 for every $3 you earn above $45,360 during the months leading up to your FRA.
However, once you reach your FRA, you'll receive a boost in benefits to make up for the months (or years) that your benefits were reduced -- so that money isn't truly lost.
2. You're not planning on a long retirement
No, it's not fun to think about. But part of planning for retirement involves considering how many years you think you'll spend in retirement. Of course, nobody knows exactly how long they'll live. But not everyone will live to 100, so by being realistic in your planning, you can better enjoy your later years.
Roughly a third of retirees say that health issues are holding them back from living the retirement they dreamed of, according to a Nationwide Retirement Institute survey. Claiming benefits at 62 can give you the money you need to travel, pick up new hobbies, or otherwise enjoy your retirement while you're relatively young. If you wait until age 70 to receive those benefits, although you'll be earning fatter checks, that money isn't as beneficial if you're not able to use it to do the things you love.
Social Security is calculated so that over a lifetime, you should receive the same amount of money overall regardless of when you start to claim benefits. Claim them early at 62 and you'll get more (but smaller) checks, or wait a few years and receive bigger (but fewer) checks. But if you're struggling with health issues and don't expect to live well into your 80s, it may be wise to start claiming Social Security as early as possible to enjoy the extra income while you can.
3. Your spouse is going to wait to claim benefits
Just because you're ready to claim your benefits doesn't mean your spouse also has to claim them at the same time. In fact, being strategic about who claims benefits, and when, can work in your favor.
If one of you claims early and the other waits, you can have some extra spending money now and later. For example, say you and your spouse both have a full retirement age of 67 and would both be receiving $1,500 per month in benefits if you wait to claim until you reach your FRA. If you claim early at 62, your monthly benefit will be reduced by 30% to $1,050 per month. Then if your spouse waits until age 70 to claim, he or she will receive 124% of the benefit, or $1,860 per month.
This can be helpful if you want to have some extra money for travel or hobbies during the early years of retirement while still earning the bonus you get by delaying benefits.
Deciding when to claim Social Security benefits is tough, and it's tempting to claim them as early as possible to start enjoying that money right away. Claiming benefits at 62 may not be right for everyone, but in certain situations, it may be the wisest decision to make the most of your money.
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