Should You Claim Social Security Benefits Early?
The financial crisis has caused some providers to consider taking their Social Security benefits earlier than they had originally planned. Is this a good idea?
You are eligible to start claiming your Social Security benefits as early as age 62. The amount you will receive goes up each year that you wait to claim your benefits. The last year you must start claiming benefits is age 70. Your full retirement age is either age 66 (if you were born before 1960) or 67 (if you were born in 1960 or later).
To find out how much you can expect to get in Social Security benefits, go to www.socialsecurity.gov and create your own account. You will see your annual Social Security statement which will tell you how much you can expect to get if you start claiming benefits at age 62, your full retirement age, and age 70. These numbers are based on the assumption that you will be earning the same amount of money as you earned in the previous year (2019) until you reach these ages. If you earn more in the coming years, your benefit will rise and if you earn less, your benefit will decline.
If you start claiming Social Security benefits before your full retirement age and earn more than $19,560 in 2022, you benefit will be reduced. Once you reach your full retirement age you can earn as much money as you want, and it will have no impact on your Social Security benefits.
Ideally, you should wait for as long as you can before claiming Social Security benefits. For every year you wait after your full retirement age, you benefit will rise by about 8% a year, which is significant. I strongly recommend that you look at the online calculator, www.opensocialsecurity.com to see the month and year you should start collecting your benefits that will give you the most income over the lifetime of you and your spouse.
Before making the decision to start claiming Social Security benefits earlier because of COVID-19, consider the reduction in benefits this will mean over your lifetime if you take this step. It could mean a loss of tens of thousands to hundreds of thousands of dollars. I would try your hardest to meet the financial crisis you may be facing by doing everything else possible before taking this step.
Social Security planning is complicated, so I would not make any decision until you talk with a financial planner.
Tom Copeland - www.tomcopelandblog.com
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