1. Planned End-of-Life Care is on Your Mind
Because your Social Security benefits cease to be paid upon your death, you will be deprived of any future benefits if you pass away before filing for them. If you want to maximize your Social Security benefits, you need to figure out how. This is an example of a scenario where you might wait until your 70th birthday in order to receive the larger monthly benefit. You won’t get any benefits if you die before your 70th birthday. Even if you’re in excellent health, it’s impossible to predict how long you’ll live. Delaying Social Security benefits may not be worth it if you have a terminal or life-threatening illness.
2. Your life expectancy is reduced.
Delaying your Social Security benefits is rewarded by the government with a higher monthly benefit if you wait a long time. Even though your full retirement age is 66, you can begin collecting benefits at the age of 62 and receive about 75 percent of what you would receive if you were to wait until then. To put it another way, instead of receiving $1,000 per month when you turn 66, you’ll get about $750.
Keep in mind that even though a larger monthly benefit may sound appealing, it would take four years to accumulate the additional $250 per month. Over the course of four years, you’d receive $36,000 in reduced monthly payments of $750.
You won’t break even until you’re 66 if you start collecting $1,000 a month at age 66, compared to collecting early. People who know they will not live to be 78 because of deteriorating health will receive more benefits over the course of their lifetime.
3. You must pay off your debts
Before you can retire, you’ll have to pay off some debts. Early Social Security benefits can help you pay off high-interest debt. The 8% yearly increase in benefits you receive for each year you wait past full retirement age may not be worth the higher monthly benefit, depending on the interest rate you pay. As a result of the early benefits, you may be able to keep a larger portion of the benefits you receive later on.
4. You Can’t Work Anymore
It’s possible that even the best retirement financial plans and projections will go wrong at some point. In order to get the most out of your retirement savings, you might have planned on working until you were 70 years old. However, if you are laid off at the age of 62 and are unable to find another job, you may be forced to begin drawing benefits in order to make ends meet.
In addition, it may not be possible or healthy for you to continue working in your field later in life. Your health and well-being may be put at risk if your job necessitates heavy lifting or other physically demanding tasks. Taking early retirement may outweigh the lower monthly Social Security benefit in this case.
5. You’re Only Working Part-Time
Benefits may be reduced if your work income exceeds the annual limit if you claim Social Security before you reach full retirement age while working a part-time job. Benefits decrease by $1 for every $2 over $18,960 you earn in 2021 if your full retirement age is less than 65. For every $3 your pre-retirement income exceeds $50,520, your benefits will be reduced by $1 in 2021, when you reach full retirement age. There are many reasons why you might consider taking Social Security benefits at the age of 62.
6. No One Else Is Relying On Your Benefits
A surviving spouse, minor or disabled child can receive Social Security benefits in the event of your death, based on the number of benefits you received. Depending on their age, a surviving spouse can receive anything from 71.5 percent to 100 percent of your benefit. Even if you die, your disabled child can continue to receive 75 percent of your monthly benefits.
If no one else is eligible for benefits based on your record, you may want to consider early retirement because no one is relying on your income. If everything else falls into place and you meet the minimum Social Security retirement age, consider collecting your benefits early and enjoying life.
7. You’ve already had 35 of the best years of your life’s work.
In order to calculate your Social Security benefits, you must use your highest 35 years of earnings. It’s possible to increase your benefits by working for a few more years and delaying receiving them. But if you’re working part-time or have to retire early, you won’t miss out on the opportunity to increase your benefits with higher-earning years if you aren’t going to increase your average earnings. However, if you don’t wait until your full retirement age, you’ll receive a smaller benefit.
8. You Expect Your Investments To Grow Faster Than the Increased Benefit
Maybe taking your Social Security early and putting the money to work is a better idea if you’re going to be the next Warren Buffet. It’s important to take inflation into account, as well as how much you can expect to earn from your investments. Because benefits increase by 8% per year for every year you delay retirement, it is difficult to outperform the market’s rate of increase. The returns on these safe investments are quite good.
9. You’d like to start your own company.
While many people think of retirement as a time to unwind and relax, you may see it as an opportunity to pursue your dreams, such as starting your own business. The fear of not making enough money might have been the reason you put off starting your own business in the past. You might be able to start your own business with the money you get from Social Security. You may be able to offset the loss of benefits in the future if your business is a success.
10. You’re Concerned Social Security Will Disappear
For some, the prospect of higher retirement ages or lower benefits, or higher taxes on benefits in the future raises concerns about Social Security. As a result, they are eager to get their hands on the sure thing. The government estimated that the Social Security trust funds would run out in 2034 in a Social Security summary released in 2017. Annual Social Security taxes, on the other hand, are expected to keep benefits at about three-quarters of their current levels.
Do you think you’re ready to claim Social Security early? If you’re thinking about retiring, here are some key questions to ask yourself before making a final decision.