Dear Savvy Senior,
I will turn 62 in a few months and am trying to decide when to start taking my Social Security retirement benefits. Almost everything I read on this topic tells me it’s better to wait until my full retirement age or beyond. Is there ever a good reason to start early?
Ready to Retire
You’re right! Most financial planners agree that waiting to take your Social Security retirement benefits is a smart financial move. Why? Because each month you defer, from your 62nd birthday to your 70th, your monthly benefits grow.
Yet despite the financial incentive to wait, most people claim their benefits before full retirement age, which is currently 66 for those born between 1943 and 1954.
But speeding up the clock isn’t always a bad idea. Here are some scenarios where it may make sense for you to collect early.
You need the money: If you’re retired and don’t have enough savings or a pension to cover your living expenses, you’ll probably have to start early. But, if you decide to work, be aware of the earnings test.
If you claim Social Security benefits before full retirement age (and you don’t reach 66 this year), you’ll forfeit $1 for every $2 you earn over the earnings limit of $15,720 in 2016. It usually doesn’t make sense to take benefits early if you’re working, unless your income is below the earnings limit.
You have poor health: Having a serious medical problem that is likely to shorten your life is another reason to start your benefits sooner rather than later.
Consider the “breakeven point” -- the age you need to reach to come out ahead by waiting to claim Social Security -- is 78 for someone who claims at 62 versus waiting to 66. If you don’t anticipate making it to 78, go ahead and claim early.
However, if you are married or have other dependents at home that depend on your benefit, you may want to hold off because starting early will reduce their survivor’s benefits.
You’re a lower-earning spouse: If you’re married and your lifetime earnings are much lower than your spouse’s, you could take your benefit early but your higher-earning spouse should delay. This lets you increase your household income now, while the higher-earning spouse’s benefit grows, therefore increasing the survivor benefit.
This strategy is best suited when a lower-earning wife is three to six years younger than her husband and her earnings are 30 to 40 percent of his. She should claim at 62 and he should claim at full retirement age, or better yet wait to age 69 or 70. Because the husband is likely to die earlier, the wife’s reduced benefit will be temporary and she will then qualify for the higher survivor benefit.
Skeptical of Social Security: Many people take their retirement benefits early because they fear Social Security will go bankrupt, but this not a good reason to start collecting early.
While it is true that the Social Security trust fund will become insolvent around 2033 -- 17 years from now -- if no changes are made, that doesn’t mean there will be no more money for benefits. It means that the fund is no longer taking in enough money to cover all promised benefits. Thus payment checks are likely to end up shrinking by about 25 percent.
But, if the thought of losing out on your benefits keeps you up at night, then it may be better to start claiming early instead of holding off for more later.
To see how much your benefits will be affected by your claiming age, use the Consumer Financial Protection Bureau’s new Planning for Retirement tool at consumerfinance.gov/retirement/before-you-claim.
Jim Miller is a contributor to the NBC “Today” show and author of The Savvy Senior. Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org.
Your Opinions and Comments
Be the first to comment on this story!
You must be logged in to post a comment.
South Texas Living Archives
A creepy Halloween party appetizer (October 19, 2016)
Applying for Social Security (October 19, 2016)
Chili Cook-off to benefit Wilson County youth (October 19, 2016)
DRT joins Heritage Music Festival (October 19, 2016)
DRT to meet Oct. 24 in Kerrville (October 19, 2016)
Enjoy Harvest Festival in Marion (October 19, 2016)
Enter Pecan Bake Show (October 19, 2016)
Little Golden Books (October 19, 2016)
Make plans for Halloween fun and fall fests (October 19, 2016)
Meeting the needs of the community: St. Vincent de Paul (October 19, 2016)
R&B legend opens Carver season Oct. 29 (October 19, 2016)
Readers share their spooky tales, part two (October 19, 2016)
Road Runners plan Oct. 22 group run (October 19, 2016)
See country legends Oct. 22 (October 19, 2016)
Try your hand at square dancing (October 19, 2016)
Turn yard waste into gardener’s gold (October 19, 2016)
Baptist church to ring in 100 years (October 12, 2016)
Church plans Junk and Treasure Sale (October 12, 2016)
Comal Country Music Show is Oct. 18 (October 12, 2016)
Davy Crockett (October 12, 2016)
Enjoy fried chicken in Poth Oct. 23 (October 12, 2016)
Enjoy this flashy winter resident (October 12, 2016)
Join in the 2016 Rosary Crusade (October 12, 2016)
National Charity League plans celebration (October 12, 2016)
New program increases student knowledge of E-cigarette dangers (October 12, 2016)
Play bunco in La Vernia Oct. 22 (October 12, 2016)
Pondering a poignant letter from the past (October 12, 2016)
Save the date for Oct. 22 March for Life (October 12, 2016)
Should you redeem old savings bonds? (October 12, 2016)
Show Barn Cook-off approaching (October 12, 2016)
Sutherland Springs Old Town Day (October 12, 2016)
The business of aging grows more complex (October 12, 2016)
Try your luck at China Grove Lions Club Casino Night (October 12, 2016)
Atascosa County Craft Show seeks vendors (October 5, 2016)
Beautify your landscape with cacti (October 5, 2016)
Experience Oktoberfest in San Antonio (October 5, 2016)
Gilded peanuts and golden memories — recalling past Floresville Peanut Festivals (October 5, 2016)
Japan Fest set for Oct. 16 (October 5, 2016)
Meal service delivery options for seniors who don’t cook (October 5, 2016)
Oktoberfest comes to Floresville Oct. 15 (October 5, 2016)
Past Pirate champions will never be forgotten (October 5, 2016)
Readers share their ‘spooky’ tales (October 5, 2016)
Sacred Springs PowWow (October 5, 2016)
Shorter teapot (October 5, 2016)
Sinatra tribute comes to Kerrville (October 5, 2016)
Stockdale librarian updates Blue Bonnet Club members (October 5, 2016)
Sunnyside 4-H Bake Sale (October 5, 2016)
Time for turkey in Cestohowa (October 5, 2016)