Applying for Social Security as early as possible: when it makes sense

“It’s better to apply for Social Security later than early,” this is a recommendation widely spread by financial advisers and laypersons. After all, if you delay receiving benefits as much as possible, payments may increase significantly.

The advantages of delayed receipt of benefits will apply (and attract) most people. However, early (or as soon as the conditions are met) is also the right choice for many people. The following are some situations that may apply.

Key points

  • Americans can receive Social Security benefits from the age of 62, which is earlier than the “full retirement” age.
  • Applying for benefits early means getting checks faster, but the amount of these checks will be reduced.
  • Sometimes it makes sense to apply for benefits early instead of waiting and getting bigger checks every month.

You want to retire now-or reluctantly retire

Unless you have other forms of income, applying for social security is the only way for you to survive without a stable job. If you are fired or find it difficult to maintain your job, it may be wise to retire early and receive benefits. Usually, this is not a good idea, but for those who are financially troubled in old age, this may be the only option. If you have a choice, try to wait until your full retirement age, which is usually 66 or 67. Choosing before that will reduce your monthly benefits.

This is an escape route worth knowing, just in case: if you are lucky and suddenly find a job or other source of income within one year of early retirement, you can choose to repay the benefits you received from social security and reapply in the future. The welfare will be higher. This process is called withdrawal, and you only have one chance to redo it.

Your health is not good

Although life expectancy usually continues to rise, many elderly people still worry about premature death. If you have a chronic disease or terminal illness, you may consider receiving benefits as soon as possible. CFP Jennifer Davis of Halpern Financial said: “If you are very likely to be unable to receive benefits, then there is no point in delaying benefits.”

You have family

If your children or other relatives qualify as dependants on your tax return, they may be eligible for dependant benefits when you receive social security payments.Mathematics may apply to everyone. The details may confuse laymen; therefore, please consult a qualified consultant.

You are divorced or have a deceased spouse

For people who are divorced but have been married for at least 10 years, and for those who have lost a partner, it makes financial sense to apply early.Survivor benefits can be a great benefit, especially for single elderly people. Everyone can claim one benefit (either for themselves or their spouse) at a time and wait to receive another benefit later.

Your spouse can benefit later

If you are still unmarried, you may only need to receive one person’s social security benefits in advance. This strategy can bring you some income immediately, while the income of others will continue to grow.Make sure to use the official social security calculator for mathematical calculations.

You have no other assets

Social security was never intended to be the only guarantee for people’s retirement; for most people, it is (or should be) a supplement to their income. But what if the raging bear market wreaked havoc on your retirement accounts and plans? For example, the Great Recession of 2008 changed the rules of the game and wiped out the gains of many portfolios over the past decade. If continuing to work is not an option, it is best to use your benefits to ensure an immediate and stable source of income.

Bottom line

The general advice still applies to many people, so don’t automatically assume that applying for Social Security as early as possible is a good idea. “It is important to avoid the temptation to receive early because Social Security is available,” Davis said. “It may be the individual’s only stable source of income (it grows as the cost of living increases).”

If you are not sure whether your situation applies, please consult a consultant.


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