You’ve probably heard me, and other financial advisers, tout the benefits of postponing Social Security (SS). The biggest reason, of course, is … more money! If you take Social Security as early as possible, at age 62, you will get far less in your monthly benefit check than if you collect at your full retirement age, or continue to wait, and file at age 70. However, if you wait to collect later, you “miss out” on all the checks you could have received over the years. It will take time, probably many years (I estimate 12 to 14 years), to “catch up” to the total money you could have had if you collected sooner. Here are six more reasons for taking Social Security before full retirement.
1. Job loss. Whether you were laid off, fired, or “downsized,” a job loss at age 62 or older can be a significant blow. Finding employment at an older age can be difficult. If you’ve tried to re-enter the workforce without success, you might want to consider collecting Social Security early.
2. Health reasons. No surprises here. As we age, we tend to have more health issues. If your job consisted of heavy lifting, for example, your body might not be up to the task anymore. Standing or sitting for eight hours a day may be a challenge, or you might have other ailments that limit your ability to work.
3. Part-time work. Maybe you have not been able to find full-time employment, you are phasing out of a full-time career, or you are caring for an elderly parent. You might need extra money to supplement your part-time income.
4. Awaiting other assets. For those who expect income from another source “down the road,” taking Social Security early can bridge the gap between a previous career and a future pension or inheritance, for example.
5. Family history. This could possibly be the best reason of all for taking Social Security early. Maybe your family doesn’t have the “longevity gene,” and everyone in your family passes away in their sixties or seventies. If that were true in my family, I would take my benefits as soon as possible!
6. Will it be there? For many years, you may have heard about Social Security “running out of money.” I doubt this will happen; too many people rely on these benefits for a major portion of their income in retirement. If you, however, are concerned that the funds you paid into the system for 40 or more years won’t be there in the future, it might be better for you to collect your benefits now, rather than to continue to wait and worry.
All six of these scenarios are legitimate reasons to collect SS benefits early. A good way to find out what is right for your situation would be to sit down with an experienced adviser. Make sure to ask if the adviser uses software to help determine the most appropriate age for you to collect Social Security benefits. With that information, he or she can help guide you.