Title: Three Groups Typically Considering Early Social Security Retirement at Age 62
Title: Three Groups Typically Considering Early Social Security Retirement at Age 62
Choosing to claim Social Security at 62 might seem like a popular strategy due to the increased number of checks, but it comes with a penalty. The government deducts up to 30% from your checks for claiming early before your full retirement age (FRA), ranging from 66 to 67 for today's workers. However, this isn't always a bad decision. Here are three scenarios where early claiming might be the best choice:
Scenario 1: Financial Struggles
If you're finding it difficult to delay your Social Security benefits, every delayed month gradually increases your benefit. But this growth continues until the maximum benefit kicks in at 70. This means you could be receiving up to 32% more per check than at your FRA. However, you'd have to forego benefits for eight years to enjoy these larger checks. This might be possible if you have a well-stocked savings account or a steady income from a job. But for those without alternative income sources, the financial security of early benefits might be more appealing, even if it means a reduced lifetime benefit.
Scenario 2: Short Lifespan
Delaying benefits can lead to a larger lifetime benefit, but you should also consider your lifespan. Those who are expected to live into their mid-80s or beyond typically benefit the most from delaying. Conversely, those with a lower life expectancy might gain more by claiming early. If you have a terminal illness or a family history of early health issues, claiming early can ensure you maximize your checks while you're still around to enjoy them. However, if you have dependents relying on your income, be aware that this could impact their survivor benefits.
Scenario 3: Income Inequality
Couples can use a strategy called "file-and-suspend" to maximize their Social Security benefits. The lower-earning spouse claims benefits at 62, providing them with immediate income that can be used to supplement the family's income while the higher-earning spouse waits to claim their larger checks. Once the higher-earning spouse becomes eligible, the lower-earning spouse can switch to a spousal benefit, which is worth half of the higher-earner's benefit at their FRA. This strategy often works best when there's a significant income disparity between the partners, but if your careers have had relatively equal earnings, it might be more beneficial to choose a claiming age based on your personal circumstances.
Regardless of when you plan to claim Social Security, it's always a good idea to have a tentative age in mind. Regularly adjust this age as your retirement plans evolve.
In some situations, individuals with financial struggles might find the immediate financial security provided by early Social Security benefits more appealing, despite the potential reduction in lifetime benefits. In terms of retirement planning and finance, it's crucial to consider factors like financial security, lifespan, and income equality when deciding when to claim Social Security.