Four Actually Legit Reasons to Take Social Security Early

An older man leans on his kitchen counter as he looks at his laptop.

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published 18 May 2024

Very early in my career, a colleague told me about a fast-growing real estate company and suggested I buy the stock. I put $10,000 into the stock. A few months later, the company was caught casting unauthorized proxy votes on behalf of their shareholders. After another few months, they were barred from the industry, and subsequently, the company filed for bankruptcy. It was an expensive but valuable lesson: Don’t listen to people at the water cooler. They know nothing of your situation, and since you’re taking the time to read this article, they probably know less about personal finance than you do.

Social Security is an area where I see some of the most flagrantly bad advice peddled. Often, this results in people claiming benefits much earlier than they should. That said, claiming at 62 isn’t always a bad move. Below are four, non-watercooler reasons to consider claiming as soon as you’re eligible.

1. Your health isn’t great.

You may have heard people speak about “Social Security break-evens.” In English, that means that if you decide to delay benefits from 62 to 67, that’s five years when you weren’t collecting benefits. The break-even is the age at which you get back those missed payments in terms of cumulative benefits, because of the higher amount you received by waiting.

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These ages are often 78 to 82. So, if you think you’ll live until your late 80s, that’s a good reason to delay. However, if there is a health reason to think you won’t, the opposite is also true. Most financial planning software will have you enter a life expectancy and then will make a Social Security recommendation. You can build out your plan using the free version of our software.

2. You’re a lower earner.

Since Social Security rules changed in 2016, our claiming strategies have also changed. One of the more common strategies we recommend for couples now is: “Higher earner delays, lower earner gets a raise.” This means that the lower earner would turn on their benefit at 62, or at retirement, and the higher earner would delay until 70. If the higher earner predeceases the lower earner, the lower earner will step up to the higher benefit.

3. You need income.

This one is somewhat self-explanatory. If you have not saved for retirement and will be completely dependent on Social Security, you must claim once you retire.

While this is not a situation our firm is often faced with, it is, unfortunately, common in our country. Our advice would likely be to work as long as you can to try to max out your Social Security benefit and then to move to a low-cost area.

4. You’re a surviving spouse.

This is the trickiest of the bunch and the one we see most often. I mentioned earlier that Social Security rules changed in 2016. This had to do with how you can claim off of spouses’ and ex-spouses’ records. For widows and widowers, the rules still allow you to switch between benefits.

Imagine Joan’s husband died when she was 62. She has not collected her benefits yet. She can elect for survivor benefits now and delay claiming her own benefit until she’s 70, assuming it’s higher than the survivor benefits.

The cost of collecting at the wrong time is high, with benefits almost 70% higher at 70 than they are at 62. Of course, you don’t know when you’ll die, but it’s worth taking a guess, considering your whole situation, and making a decision. The person in the office next door to yours doesn’t have the necessary inputs to help you decide.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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After graduating from the University of Delaware and Georgetown University, I pursued a career in financial planning. At age 26, I earned my CERTIFIED FINANCIAL PLANNER™ certification. I also hold the IRS Enrolled Agent license, which allows for a unique approach to planning that can be beneficial to retirees and those selling their businesses, who are eager to minimize lifetime taxes and maximize income.