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Is Claiming Social Security Early a Bad Idea? Maybe Not

By Maurie Backman – Apr 13, 2019 at 6:22AM

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We're often told that filing for benefits ahead of full retirement age is a major mistake. But that's not always the case.

Search the internet for the term "Social Security," and you'll probably come up with at least a half-dozen articles warning you not to file for benefits ahead of full retirement age. Doing so will lower the monthly benefit you're entitled to, thereby reducing what could be a major income stream for the rest of your life.

In many cases, that's solid advice, especially if you don't have much in the way of savings. If you're sitting on, say, a $50,000 nest egg, and are retiring in your early 60s, that's not a lot of money to last for what could be a 30-year retirement or longer, and so it would be foolish to slash your Social Security benefits indefinitely. On the other hand, if you've saved enough, Social Security could be just the thing that helps you kick off retirement on a positive note. And that's reason enough to consider filing early after all.

Senior couple in the water with snorkeling gear

Image source: Getty Images.

You can't afford to get bored

There's a reason why retirees are 40% more likely to suffer from depression than workers: Going from a full-time employment schedule to having nowhere to be day in, day out can make for a disheartening experience. And while boredom can be a challenge throughout retirement, it tends to especially come to a head early on, when seniors are attempting to navigate that transition.

That's where Social Security can help. Claiming those benefits early might give you the option to enjoy the start of your golden years to the fullest, whether that means traveling, enrolling in classes, or picking up a new hobby.

Now if your finances are truly dire, then no, you can't afford to file for benefits early and reduce that income stream for the rest of your days. But if your nest egg is in reasonably good shape, then you might consider claiming Social Security ahead of full retirement age to fill your earlier retirement years with ample entertainment.

How much of an impact will filing early have? Well, it depends on when you first claim benefits and what your full retirement age is. You'll lose about 6.67% of your benefits for the first three years you file early, and then 5% for each year thereafter. This means that if your full retirement age is 67 and you file at the earliest possible age of 62, you'll reduce your benefits by 30%.

At first glance, that might seem like a glaringly horrible idea. But let's say you do choose to reduce a $1,500 monthly benefit to $1,050, and that extra money helps you enjoy your first few years of retirement tremendously. The result might be an improved outlook and mental health, with fewer physical ailments. In fact, taking benefits early might actually help you save money on healthcare in retirement, thereby compensating for the reduction you've faced.

If you're not still convinced that claiming Social Security early can, in theory, work out well, consider this: In a report released last year by the Journal of Aging Studies, the majority of seniors who took benefits before full retirement age didn't end up regretting that choice. Therefore, if filing early allows you to enjoy your life and stave off depression, it might be worth the financial hit in the long run.

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