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Planning to Claim Social Security at 65? You May Need to Rethink That

By Maurie Backman - Mar 9, 2021 at 6:04AM

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Don't get too comfortable with the idea of taking benefits at 65. You may have to file a lot sooner.

When it comes to signing up for Social Security, you have a number of options. You can file for benefits as early as age 62 (albeit in exchange for a reduced payment), wait until your full retirement age, or FRA, (which spans the ages of 66 to 67, depending on year of birth), or delay your filing all the way until age 70 to score the maximum boost. In fact, you can file for benefits at any age starting at 62, and many seniors opt to sign up at the age of 65.

Age 65 is when Medicare eligibility begins, and so some seniors figure it's convenient to sign up for both programs at once. To be clear, filing for Social Security at 65 will reduce your monthly benefit, and the extent of which will depend on your FRA. If your FRA is 67, you'll face a 13.34% cut in your Social Security payments by claiming them at 65. But still, that's not nearly as drastic a cut as what you'd face by filing at 62. In that case, you'd be looking at a 30% reduction with an FRA of 67.

Older man resting hand on chin as if deep in thought

Image source: Getty Images.

Still, claiming Social Security at 65 may not work out for you in the end for one big reason. And that's a scenario you'll need to prepare for.

Will you be forced to retire early?

Many seniors end up retiring sooner than planned. For some, it's a matter of health issues impeding their ability to work. For others, it's a matter of getting downsized out of a job, or needing to care for another family member.

While you may very well end up being able to work until age 65, you can't discount the possibility of having to retire sooner, even if you don't want to. And that's why you shouldn't get too comfortable with the idea of claiming benefits at 65 -- you may need to sign up even earlier if you find yourself needing the money.

Now the earlier you end up claiming your benefits, the more of a reduction you'll end up facing, so a good way to compensate for that is to save as much as you can in an IRA or 401(k) plan while you're still working. Of course, going that route might also make it possible for you to stick to your plan to claim benefits at 65, even if you're forced to retire much earlier. The key, either way, is to use your savings as a backup plan.

Of course, you might also plan to claim Social Security at 65, only to realize once you reach that age that you're not happy with your savings and want to keep working so you can grow your benefits. If that's an option that's on the table for you, great. But you should know that an estimated 48% of workers wind up retiring earlier than they initially plan for, so you can't assume you won't end up in a similar boat yourself, even if you do everything you can to take care of your health and keep up with your job skills.

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