There’s a good reason why senior citizens are cautioned against filing for Social Security benefits too soon. For the rest of your life, this could result in a lower income.
When you reach full retirement age, you are entitled to receive your full monthly benefit based on your lifetime earnings (FRA).
Depending on when you were born, FRA can begin at age 66, 67, or any number in between.
Social Security benefits can be reduced by up to 30 percent if you file at the earliest possible age of 62.
And don’t think that once you reach FRA, your benefit will automatically be increased to its full amount. For the most part, you’ll have to accept a lower monthly benefit for the rest of your life.
Despite this, claiming Social Security benefits at the age of 62 can be a good idea. If any of these scenarios apply to you, this is especially true.
1. Your career has come to an unexpected end
Working until FRA and claiming Social Security is one thing. However, if you’re forced to quit your job unexpectedly, you may have to sign up for benefits sooner. Make sure you have enough money saved up to cover your basic needs.
You may have to retire earlier than expected for various reasons. There are numerous factors at play. You may develop health problems that make it impossible for you to continue working full-time.
The worst-case scenario is that you’ll be laid off and have difficulty finding a new job because of your age (even though employers aren’t supposed to discriminate against older workers).
If you can’t afford to live on credit cards, you may have to file for Social Security benefits. To be clear, it’s a sensible strategy.
2. You’re unsure of your own health status.
Regardless of when you file for Social Security, you will receive the same total lifetime benefit. The rationale is that if you sign up early, you’ll pay less each month, but you’ll have a longer period of time to pay.
However, this is only true if you have a normal lifespan. As a result, if you’re concerned that you won’t live a long or even average lifespan, it may be in your best interest to claim benefits as soon as possible.
That’s the ultimate goal, and it’s possible to achieve it by taking advantage of these strategies.
3. You’ve saved so much money that your benefits are really just a little extra money.
If you have $90,000 saved up for retirement in an IRA or 401(k), you’re going to need every penny of your Social Security benefits to cover your senior living expenses.
If, on the other hand, you’ve saved $4 million for retirement, it doesn’t matter if you receive $1,200 a month in Social Security or $2,000 a month.
If this is the case, you can expect the vast majority of your retirement income to come from distributions from an IRA or 401(k). So if you want to claim Social Security early and use the money for things like vacations and leisure purchases, why not do it?
Social Security claims at the age of 62 will reduce your monthly income, but this isn’t necessarily a bad thing. Contrary to popular belief, this may turn out to be one of the best retirement decisions you ever make.
The $16,728 Social Security bonus most retirees completely overlook
When it comes to saving for your retirement, most Americans are a few years (or more) behind the curve. However, there are a few “Social Security secrets” that can help you get more money in your retirement.
One simple trick, for instance, could net you an extra $16,728 a year! We believe that once you learn how to maximize your Social Security benefits, you will be able to retire with the peace of mind that we all desire.