There are many factors that can affect the amount you receive in social benefits each month, but one of the most critical is the age you start claiming.
While many experts recommend waiting until the age of 70 to file an application because it will result in the largest payments each month, it is not always the best move for everyone. The earliest you can start claiming is 62 years old and there are a few reasons why it can be a smart strategy to submit an application as soon as possible.
1. It can give you a boost in retirement
Technically, you do not need it retire and demand social security at the same time. For most, however, the two go hand in hand. By claiming benefits as early as possible, you may also be able to retire earlier.
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This could be especially smart for those who want to enjoy an active lifestyle as a retiree. While some retirees remain active well into their 70s or even 80s, not everyone has that luxury. Whether you are planning to travel, taking up new hobbies or just keeping up with the grandchildren, it can give you more time to enjoy your retirement when you are still young and healthy, if you claim early.
2. It will increase your income
Unfortunately, not everyone can choose when to retire. If you lose your job or have health problems and are no longer able to work, you may have to retire earlier, whether you are ready for it or not.
While you still could delay social security, that means you have to live off your savings or other sources of income until you apply. If your savings are sparse, you may have no choice but to call for social security early.
Even if you can afford to live solely on your pension fund, you may still be better off applying for benefits early. When more of your income comes from social security, you can withdraw less from your savings and your investments will grow more over time.
3. You can get out the front in the long run
In theory, the amount you receive from Social Security should be roughly the same no matter when you make claims. You will either receive more checks, but each one will be smaller, or you will receive fewer, larger payments.
However, this presupposes that you will live an average lifespan. If you live a longer life than average, you can collect more over the course of your life if you postpone benefits. But if you end up living a shorter than average life expectancy, you can get out front by making claims earlier.
For most people, the breakeven age (or the age at which you would earn more in total by deferring benefits) is somewhere in the late ’70s or early’ 80s. If you expect to live longer than that, deferring benefits can be a smart move. However, if you do not expect to live that long or simply do not want to bet your social security on your lifetime, it may be your best strategy to claim early.
There is no right or wrong answer when it comes to choosing the age at which to apply for Social Security. However, by considering your own unique situation, it will be easier to determine if it is the right move for you to report early.
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