Reason # 1 to require social security at the age of 62 | Smart Change: Personal Finance
Reason # 1 to require social security at the age of 62 |  Smart Change: Personal Finance

Reason # 1 to require social security at the age of 62 | Smart Change: Personal Finance

(Christy Bieber)

The earliest age you can get your first Social Security check is 62. Applying for benefits ASAP, however, has a cost, as each month you delay beyond 62 results in a small increase in your monthly check amount. If you get your benefits as soon as you can, you give up any chance of raising your retirement income.

While having a minor check certainly has financial disadvantages, there is one circumstance where you absolutely do not want to wait longer than necessary to get your first payment. If you find yourself in this situation, do not hesitate to get your retirement income from Social Security as soon as possible.

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This is the best single reason to require social security as a 62-year-old

The absolute best reason to start getting Social Security checks at 62 is because you need the money to avoid draining your retirement savings.

There is a very real chance that many seniors will find themselves in this situation. Many people plan to work well into their 60s, but living conditions often end up making it impossible. If you lose your job in the early 60’s and can not find other work that pays off, you get sick and can not work, or you have to quit your job because your loved ones need your care, you may simply have no choice but to retire faster than planned.

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Even when your paychecks stop coming in, the bills keep piling up and you need a way to cover necessities – including health insurance along with other costs. If you do not have a pension, you have few options other than relying on your savings. The problem is that you can not take too much out of your retirement accounts too soon, or you risk reducing the principal to such a dangerously low level that your investments earn almost nothing.

You do not want your savings account balance to drop to $ 0 while you still need income from it, and to avoid this you need to set and stick to a secure payout rate (such as limiting yourself to withdraw not more than 4% of your account balance). If you can not maintain this withdrawal rate without social security in addition to distributions from your investment accounts, you should start getting pension checks right the moment you can.

Why it makes sense to keep your savings at the expense of a smaller social security benefit

Now the obvious disadvantage of claiming Social Security at 62 is that your benefits will be much less than they would have been if you had delayed applying for benefits.

You have a full retirement age based on your year of birth. It is between 66 and 4 months and 67. If you requirements of 62, which is a good while before your FRA, you will shrink the standard social security benefit you would have been entitled to if you had waited. The reduction in your standard benefit can be as much as 30% if your FRA is 67.

You also give up the chance to earn delayed pension credits when you claim social security at 62. These increase benefits by 2/3 of 1% per month, which adds up to 8% for each year you waited beyond FRA. As a result, your checks on 62 will be much less than they would have been if you had postponed applying for 70.

But accepting a minor benefit is worth it to preserve your savings for a simple reason. No matter what you do, you can not live comfortably on social security alone. These benefits are intended to replace about 40% of your early retirement income, when about 80% to 90% of your salary is the minimum that most experts recommend trying to live on. Even if you increase your monthly benefit as much as possible, it will still be extremely difficult to get what you need covered without additional savings.

So the bottom line is that you are better off with less social security control and supplemental income later in life rather than a larger check and an empty savings account that does not give you distributions. That’s why it’s easy to claim social security as soon as you can when you’re 62, if anything else would make you so dependent on your investments that you drain your account dry.

The $ 18,984 social security bonus completely overlooks most retirees

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