It’s a good idea to try to figure out when you’ll claim Social Security well before you retire. That way, you can get an estimate of your monthly benefit based on your filing age. And from there, you can do some math to make sure you’re making a smart decision.
There is now a fairly wide range of Social Security filing ages from which you can choose, with the earliest being 62. There is technically no final or definitive filing age, although you should know that there is nothing to be gained financially by delaying Social Security beyond age 70.
But often you will hear that it is wise to wait at least until your full retirement age (FRA) to apply for Social Security. This age is 66, 67, or somewhere in between, depending on your date of birth.
Full retirement age is the age at which you receive your full monthly Social Security benefit based on your individual earnings history. Taking your benefits at age 62 could reduce them by up to 30%, which is a financial hit you may not want.
But at the same time apply for social security at 62 It may not be the best choice, but you should still consider doing it. Here’s why.
This is a good backup plan.
It’s not certain that you’ll need to claim Social Security right after you retire. If you have plenty of savings, you may be able to take withdrawals from your 401(k) or IRA and delay taking Social Security to get a higher benefit.
But often, people retire and immediately sign up for Social Security. This is something you might not consider doing until you reach retirement age. But sometimes plans can go awry.
It is not uncommon to be forced into early retirement for a variety of reasons, ranging from health issues to being fired due to age (which is completely illegal but also difficult to prove in many cases).
If you find yourself unemployed at age 62, you may have no choice but to immediately apply for Social Security benefits to cover your expenses. That’s why it may be a good idea to plan to file your claim at age 62 when calculating your retirement numbers. That way, you’re factoring in the lowest monthly benefit you could receive. If you’re able to file at any time after age 62, you’ll be able to collect more money, which will only improve your numbers.
It’s better to play it safe
To be clear, planning Getting a lower Social Security benefit and collecting one are two different things. If you’re still working and healthy at age 62, it may make sense to delay filing until full retirement age or beyond (you’ll get an 8% increase for each year you delay beyond that age, up until you turn 70).
In fact, you should plan on filing for Social Security at age 62 just in case you’re forced to. If you can make your retirement expenses work with a lower monthly benefit, you’ll be all the happier if your actual benefit ends up being much larger.
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Here’s Why You Might Be Planning to Claim Social Security at 62, Despite a Smaller Monthly Check was originally published by The Motley Fool
