Should you start collecting Social Security at 62 or wait? Here are 3 smart reasons to start getting paid ASAP
Americans nearing retirement know the advice all too well: When it comes to Social Security, good things come to those who wait. And those who can’t wait? Their benefits get slashed.
But those reduced benefits can add up. If you take Social Security before full retirement age, you should expect a 30% reduction in monthly benefits, according to Fidelity.
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Yet 2022 Gallup research indicates many take the exit ramp sooner. It found the average retirement age was 61, despite the fact that 62 is the youngest age you can claim your government benefits.
Still, even knowing they could see a 30% reduction in their monthly checks when they do hit 62, these retirees aren’t necessarily making a grave error. There are some solid reasons to start taking your Social Security benefits as soon as you can.
Health status
Health issues rank high on the list of concerns in a 2021 Gallup poll cited by Experian. Respondents were particularly anxious they could face being disabled, needing an unexpected surgery or be given a serious diagnosis.
While it’s possible you could enjoy an early retirement and your health remains robust, keep in mind that Medicare benefits don’t kick in until you reach 65.
That being said, the thing with unexpected health emergencies is that they’re unexpected. And they can get expensive. Having a regular stream of income can mean the difference between being able to manage anything that pops up and having to go into debt to cover medical bills.
Debt
Debt doesn’t discriminate based on age. Americans racked up $16.9 trillion in debt during the last few months of 2022, according to the Federal Reserve. Of that, those between 50 and 59 had an average debt load of $86,994.
Especially when that debt is unsecured, as in credit cards with high interest, it’s a real budget killer.
Why continue, then, to rack up runaway interest charges if you have government cash available?
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Ideally you’d pay off all debts before you decide to retire, but if Social Security can help wipe out stubborn credit card balances, that’s a good solution too. You can claim checks of different amounts now and claim lower benefits later.
And if you’re still worried about cash flow being too tight, you can continue working and still receive benefits — but only if you’ve reached full retirement age, around 66 or 67.
Your partner earns enough for you both
If your spouse claims full Social Security benefits at retirement age, you can then claim 50% of their benefits.
First, take a good hard look at what you earn. If 50% of your spousal income is more than 100% of your income, you might as well go ahead and just retire to live out those Golden Years dreams.
Bottom line: Get a second opinion
Americans who wait until they reach the full retirement age likely enjoy the best Social Security scenario. But if you’re ready to pull back professionally, a good compromise might be easing into retirement to enjoy the good health you have, even as you manage debts within your means.
So is 62 the magic number?
Maybe, if you fit the bill as we’ve described it above.
Either way, if you're not sure what to do next, you're not alone. Data from the Federal Reserve Board shows only 40% of working Americans feel confident about their retirement savings.
One of the best ways to get a handle on where you stand for retirement is to get some expert input. Working with a financial adviser is often a smart move, and the sooner you get started, the sooner you'll be able to put those nagging thoughts to rest.
And while finding a suitable and trusted professional can feel like a full-time job on its own, there are free online services these days designed to match you with a pre-screened financial adviser who'll meet your unique needs in as little as 3 minutes.
Once you've matched with an adviser, you're able to consult for free with no obligation. But you may find looking at the numbers with a knowledgeable third party helps clarify not only when the best time to retire will be, but what you can expect it to look like too.
And remember: They’ve got their own retirement to think about, so you can benefit from their experience in more ways than one.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
