The monthly benefit you get from Social Security could be just the thing that sustains you throughout retirement. So it stands to reason that you wouldn't want to reduce that benefit -- right?
Well, there's an easy way to help ensure that your monthly Social Security benefit isn't slashed. All you need to do is wait until full retirement age (FRA) to sign up. That's when you're entitled to your complete monthly benefit based on your personal wage history.
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FRA is dependent on year of birth. If you were born in 1960 or later, it's age 67.
However, you are allowed to sign up for Social Security beginning at age 62. Doing so will get you your money sooner, but it'll also mean a reduced monthly benefit for life. In fact, claiming Social Security even one month ahead of FRA will result in a reduced benefit (though your reduction won't be as severe in that case as a reduction you'd face for filing many years early).
In many situations, it pays to wait until FRA to file for Social Security. But there are some exceptions to that rule. Here are a few that might apply to you.
1. You're out of a job
If you lose your job at a time when you don't have savings to fall back on, you might land in a really dire spot in the absence of Social Security. So if that income is available to you in that situation, take it. You're better off locking in a lower monthly Social Security benefit than signing up for what could be many thousands of dollars of credit card. That's the sort of debt that could follow you to the grave.
2. Your health isn't in good shape
When you're in poor health, it doesn't always mean a shorter life expectancy. But unfortunately, it could. And that means that it might actually make financial sense to claim Social Security early. If you start getting your money sooner and pass away, say, in your mid-70s, you'll come out with more lifetime income than you would by waiting until FRA to first claim benefits.
3. You have a much older spouse and you want to be able to spend some time in retirement together
Maybe you're turning 62 and your spouse happens to be 15 years older than you. Chances are, you'll outlive them. That's not a guarantee, but it's likely. In that situation, claiming Social Security before FRA could give you an opportunity to retire at a time when your spouse's health is still pretty good. That could make it so you're able to enjoy a bunch of good years together in retirement.
The danger of claiming Social Security before FRA is locking in a lower monthly benefit for life and struggling financially because of that. But in certain circumstances, an early Social Security filing is actually a savvy financial move. So don't assume that you have to wait until FRA to start taking benefits. Instead, consider your personal situation and think about what's best for you.
