For the vast majority of Americans, the earliest possible age to collect Social Security is 62. But there are some circumstances in which younger individuals -- even children -- can benefit from the program. These include:
- People who are unable to work due to qualifying disabilities.
- Qualifying children whose parents are receiving benefits.
- Younger spouses who are taking care of said children.
- Surviving spouses whose partners have passed away.
It's helpful to remember the original intent of Social Security from the outset: to provide support to Americans who are typically considered vulnerable -- namely, the elderly, the disabled, widows and widowers, and children.
We'll cover who qualifies for these benefits, starting with cases where people can claim Social Security benefits before age 62, and then we'll talk about why the timing of Social Security benefits is so crucial.
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Disability benefits: Social Security Disability Insurance
While retirement benefits are the most common form of Social Security, the payroll tax that comes out of workers' paychecks also funds disability insurance. As the Social Security Administration (SSA) notes, "The sobering fact for 20-year-olds, insured for disability benefits, is that more than 1-in-4 of them becomes disabled before reaching retirement age."
- A "recent work" test
- A "duration of work" test
First, the SSA will look into how long you were recently working before you became disabled. Here's what it takes to pass the "recent work" test.
|If you became disabled...||Then you must have worked for at least...|
|Before 24 years of age||One-and-a-half years in the last three years, ending during the quarter in which you became disabled.|
|Between the ages of 24 and 31||At least half of the time between the age of 21 and when you became disabled. For instance, if you became disabled at 29 years old, you must have worked for at least four years.|
|After the age of 31|| |
At least five years in the past 10 years, ending when you became disabled
Data source: SSA.
If you pass this test, you move on to the "duration of work" test. While the SSA says these requirements may not apply in all cases, those considering filing for Social Security Disability Insurance can use them as guidelines.
|Age at Time of Disability||Minimum Years of Work|
Data source: SSA.
But passing these two tests alone won't guarantee that you'll get coverage. The SSA is up front about the fact that the requirements for SSDI benefits are strict.
You'll need to send in documentation about your disability and your family's income when you apply. Even then, your disability needs to be qualified as "severe," which generally means one of two things:
- You'll be unable to work for at least a year.
- The disability will result in death.
It also needs to fall under SSDI's qualified disabilities.
In general, SSDI benefits are modest, with the average payout in July 2018 hovering right at $1,200. That's $14,400 annually -- which is not enough to support most individuals, let alone a family.
Disability benefits: Supplemental Security Income
Because those payouts are modest, and because not all unemployed Americans will qualify for disabled status, there is another program that can pay Social Security benefits to people other than retirees: Supplemental Security Income (SSI).
There are three groups of people who may qualify for SSI:
- Those over the age of 65
- Those who are legally blind
- Those who are disabled
Even if one of these three criteria is met, there are also strict income-based criteria (as opposed to the work-based requirements of SSDI), as well as resource-based caps on what you can receive.
A lengthy list of public assistance programs do not count toward income -- including SNAP benefits (formerly known as food stamps), home energy assistance, and any services you might receive for your disability. Specific cut-off limits for losing SSI eligibility, however, vary by state and region within a state. You can only find out what the cut-offs are in your area by calling the Social Security Administration at 1-800-772-1213.
If your resources (things you own, generally speaking) amount to more than $2,000 ($3,000 for a couple), however, you will not qualify for benefits. Resources include cash, stocks, bonds, and any real estate other than your primary residence. Your home, car, burial plots, and life insurance policies with face values of up to $1,500 are among the assets that do not count as resources.
SSI benefits are even more modest than SSDI benefits, maxing out at $750 for an individual and $1,125 for a couple -- that's $9,000 and $13,500, respectively, per year. Those amounts can also go up in certain areas where state agencies add additional payments on top of the federal ones. In California, for instance, a disabled individual can receive up to $910 per month. If you believe you might qualify for SSI, here's more information on submitting an application.
Benefits for children
Adults who struggle to support themselves will also struggle to support the households that depend on them for income. As such, the SSA also provides benefits for children whose parents are disabled, already receiving Social Security retirement benefits, or deceased. To qualify, a child needs to be both unmarried and one of the following:
- Under age 18;
- Still in high school and either 18 or 19; or
- 18 or older with a disability that began before the age of 22.
A child who meets these requirements and has a parent who receives any type of Social Security benefits is eligible to receive 50% of said parent's benefit. If that parent passes away, the child is entitled to up to 75% of the benefit -- assuming they still meet the age requirements.
There are, however, limits to the amount an entire household can receive from Social Security -- which can come into play depending on each family's circumstances. In general, those benefits max out at 150% to 180% of the parent's benefit.
Benefits for spouses taking care of said children
If you are a parent to one of the aforementioned children -- meaning that your spouse receives Social Security and your child also gets benefits -- then you, too, are entitled to benefits. That's true even if you don't have a work history or have yet to reach the age of 62.
These benefits max out at one-half of your spouse's benefits. If your child is not disabled, those benefits stop once the child reaches 16 -- even though the child can continue receiving such support for a few more years. If, however, the child is disabled, those benefits can continue so long as you are the primary care provider for that child.
As mentioned above, the limits on household benefits could reduce the overall amount of this spouse's benefit.
Benefits for surviving spouses and ex-spouses
Sometimes, there's a large age gap between spouses. That can create a situation where one partner is receiving Social Security while the other is younger, working, and years away from being able to claim either their own benefits or spousal benefits.
If one spouse is receiving any kind of Social Security benefits and passes away before his or her partner reaches 62, the surviving spouse is entitled to the deceased's benefits. The value of those benefits depends, however, on the age at which the initial claim was made. If the surviving spouse claims survivors benefits at age 60 -- the earliest possible age to do so -- they will be worth 71.5% of the deceased's full benefits. The value of those benefits then increases over time until the surviving spouse reaches his/her own full retirement age.
If the surviving spouse is disabled, and that disability occurred within seven years of the deceased spouse's passing, then those reduced benefits can be claimed as early as age 50.
Importantly, benefits can also be claimed by ex-spouses under the same guidelines as above, assuming the couple was married for at least 10 years and the surviving ex-spouse has not gotten remarried. If the spouse remarries before 60, then he or she forfeits these survivors benefits.
As one last caveat, if a divorced, surviving ex-spouse is caring for a qualifying child, then the 10-year marriage rule is waved.
The timing of taking Social Security
Now that we've covered all of the different situations where someone might be able to receive Social Security benefits before 62 years of age, it's time to dive into all the questions surrounding the best time to claim retirement benefits.
While you can claim retirement benefits as early as 62, the full retirement age (FRA) currently stands between 66 and 67, depending on the year you were born. If you claim benefits earlier, your full monthly benefit checks go down in value. If you wait past your FRA, your monthly benefits will go up for every month you delay up until age 70.
You can find out what your full retirement benefit is by using this tool from the Social Security Administration. Once you have that, you can use the chart below to figure out what your monthly benefit would be depending on when you decide to claim and what year you were born.
|Retirement Age||Born 1943-1954||Born in 1955||Born in 1956||Born in 1957||Born in 1958||Born in 1959||Born in 1960 or Later|
Chart by author. Data source: SSA
Knowing this, it's easy to assume that everyone could maximize their lifetime benefits payments by waiting until 70 to file for Social Security. But that ignores a crucial variable: how much time you'll spend collecting those benefits. Those who start collecting Social Security at 62 will receive almost 100 monthly checks before 70-year-old filers get their first checks in the mail.
As an example, let's say you were born in 1960, and your full retirement benefit is $2,000 per month. If you claim at age 62, your monthly check will be reduced to $1,400. If you wait until age 70, it will be raised to $2,480 -- that's $1,080 more than you'd be entitled to receive at age 62. However, if you filed for benefits at 62, you'd collect more than $134,000 ($1,400 x 96 months) from the SSA by the time you reached age 70, so you'd have a major head start despite the lower monthly benefit.
In other words, if you claim benefits at age 70, it will take you many years to collect more total benefits than you would have collected by claiming early. This is where breakeven points come in. The lifetime payout for a hypothetical retiree who claims at age 70 doesn't surpass the early claimant's until their late 70s, and only surpasses those who claim at full retirement age in their early 80s.
Chart and calculations by author.
Therefore it only makes sense to delay your benefits if you believe you'll live long enough for the bigger checks to make up for all the checks you missed. When you're trying to decide when to claim Social Security retirement benefits, you need to consider not only your financial needs and circumstances, but also your health.
Traditional spousal benefits
As if all those variables weren't enough to weigh, there's another big one we haven't touched on: spousal benefits. Because one partner often stays home to help raise a family -- and thus has a more modest earnings history -- they are entitled to benefits based on their spouse's earnings history.
Here's a broad overview of the factors that can play a role in deciding when each spouse claims benefits:
- Everyone is entitled to a Social Security retirement benefit, assuming they have accumulated enough working credits -- normally equal to 10 years of work.
- Spouses are entitled to benefits as high as half of their partner's full retirement benefit.
- Spouses, however, are also eligible for benefits based on their own working records. If your spouse is already receiving benefits, and then you file, then you'll automatically receive the greater of your own benefit or up to one-half of your spouse's benefit (at your full retirement age).
- If the higher-earning partner dies, the surviving partner will either continue to receive their own benefit or assume the full value of the deceased's benefit -- whichever is higher.
The number of different scenarios that can play out is dizzying. For example, spousal benefits max out at 50% of the higher earner's benefits at his or her full retirement age. In other words, there's little immediate payoff for the higher earner to wait until 70 to claim benefits -- as far as spousal benefits are concerned. However, waiting beyond your FRA to file will increase the survivors benefit your spouse is entitled to if you pass away first.
It's all part of the mental acrobatics that retirees need to go through when figuring out what their highest priorities in retirement will be.
The trade-offs of claiming immediately and waiting
Despite what you might hear, your spending will most likely drop in retirement. While you will end up spending more on healthcare -- particularly long-term care or long-term care insurance -- your expenditures in virtually every other category will fall.
Because you no longer need to commute to work, for instance, the costs associated with transportation generally drop. Instead of eating out because you don't have time to make dinner, retirees often spend less on food, as they cook more of their meals at home.
Of course, every retiree will be different, and it's important to take honest stock of what you want your retired life to look like on a day-to-day basis. A strong argument can be made for delaying your Social Security benefits, as the value of those benefits will increase for each month you wait up until age 70, permanently boosting the monthly checks you receive from the program.
At the risk of over-simplifying things, however, I believe most retirees should claim Social Security as early as possible, provided that:
- The combination of income from Social Security and other sources will allow you to meet your basic needs -- using the 4% safe withdrawal rule as a guide;
- you have practiced living on your budget and feel confident that you can live within your means; and
- you have a clear purpose for retirement, which includes at least three core pursuits.
The last bullet point might seem odd, but there's a good reason for it. Wes Moss, chief investment strategist at Capital Investment Advisors and author of You Can Retire Earlier Than You Think has found that "happy" retirees have an average of 3.6 core pursuits upon entering retirement, as compared to less than two for unhappy retirees.
What's a core pursuit? It's any activity that gives you purpose, meaning, and the feeling of intrinsic rewards. Gardening, coaching, spending time with grandkids, and investing would all be considered "core pursuits," to name a few.
But there's an even more powerful reason that I believe many of us should claim Social Security as early as possible: The control over our time that retirement grants us produces a strong and enduring bump to our overall contentment with life. If the extra income that Social Security provides helps you reach that state, I suggest taking it as soon as your basic needs are met.
There's no price tag you can put on that. What's money for, if not to help us enjoy our time on Earth? Whenever you decide to claim it, use Social Security wisely to make the most of your remaining years.
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