senior couple standing together

Sooner rather than later can turn out to be a good strategy.

Even though there are many, many excellent reasons to delay taking Social Security benefits, there are some good reasons to take it early that do make sense, according to the Government Executive in “Why You Might Want to Take Social Security Early“. It should also be noted that Social Security’s own statistics show that 70% of the 42.4 million retirees get reduced benefits because of taking them before their full retirement age.

The biggest reason for taking benefits early is you can’t afford to retire without claiming your benefit. There’s no need to sacrifice your financial security early on in the hope that you’ll get a big payout later in life. However, you should do those calculations carefully. A Social Security benefit along with other retirement sources, like a federal retirement benefit for federal employees, might provide adequate income.

Social Security benefits are a little more tax-friendly than withdrawals from traditional retirement savings. Delaying Social Security and increasing the withdrawals from retirement savings a little between the ages of 62 and 70 might lead to lower tax bills in your later years.

Another reason to take your benefits early, is to help family members receive benefits based on your work record. A spouse or child could receive a monthly benefit of up to half of your full retirement benefit, if they qualify. If your spouse does not have an earned Social Security benefit of their own, or if their benefit is smaller than half of yours, it may be helpful for you to claim early.

The Social Security Administration reports that of the 25 million women age 65 or older who were receiving benefits as of December 2017, 52.2% of them were entitled solely to a retired-worker benefit. About 26.5% were entitled to both a retired-worker benefit and a wife’s or widow’s benefit, and about 21% were receiving wife’s or widow’s benefits only.

Note that payments to your family do not decrease your own retirement benefit. The value of the benefits your family may receive, when added to your own benefits, may help you decide that filing early for benefits will be better.

A widow or former spouse can explore what benefits their deceased or ex-spouse has earned. In some cases, you may be able to apply for retirement or survivors benefits now and switch to a higher benefit later. If you are already receiving retirement benefits, you can only apply for benefits as a widow or widower if the retirement benefit you receive is less than the benefits as a surviving spouse.

If you were born before January 2, 1954 and have already reached full retirement age, you have the choice of receiving only your current or divorced spouse’s benefit and delay claiming your own retirement benefit. If you were born after that, the option to take only one benefit at full retirement age is no longer available, so you will effectively be filing for all retirement or spousal benefits.

An estate planning attorney can advise you on creating an estate plan that fits your specific circumstances and also advise on the right time to apply for Social Security.

Reference: Government Executive (July 18, 2019) “Why You Might Want to Take Social Security Early

For more information on elder law, retirement planning and estate planning, please visit my estate planning website.

Mr. Amoruso concentrates his practice on Elder Law, Comprehensive Estate Planning, Asset Preservation, Estate Administration and Guardianship.