If you read our blogs regularly, you know that we often encourage you to wait as long as possible to claim your Social Security benefits. That’s because, for every year you wait beyond your full retirement age, you can reap a larger monthly check. The opposite is also true for claiming benefits earlier than full retirement age; you can begin receiving your checks as early as age 62, but they will be reduced by about 25 percent of the full amount you would have received otherwise.
Yet, some people do choose to claim their benefits at age 62, and it’s not always avoidable. Most of the time, early claims happen for the following three reasons.
They need to retire early. An illness or disability sometimes forces retirement earlier than originally planned – either for the individual, or their spouse, who needs to devote more time to caring for them. At other times, workplace downsizing and economic conditions can cause an early retirement.
They aren’t sure of their own life expectancy. Yes, claiming benefits earlier will result in lower monthly checks, but you’ll also be receiving them longer. Those who wait will claim larger checks, but have no way of knowing how long they might live. The Social Security system is designed so that those who live to their average expected age will receive about the same amount of money over the years, regardless of when they claim their checks.
It boils down to perhaps a gamble: If you think you will enjoy an extra long life, you might be tempted to claim benefits later and enjoy more income. If you bet on an average lifespan or less, it might make sense to claim benefits earlier.
They planned it this way. Some people are perfectly happy accepting a lower monthly check, in exchange for retiring earlier at age 62. These people often planned their retirements this way from the beginning, and have established a stable form of retirement income that covers most of their needs. Now they can enjoy more of their retirement years by clocking out of work a bit earlier.
On that note, give us a call to discuss your retirement plans. If you’d rather retire a bit earlier, we can review your retirement income plan to help you decide if that might be a possibility for you.