Many factors must be taken into account when deciding when to apply for Social Security. For most people, it is advisable to wait to start receiving benefits well past the earliest benefit age of 62 years. This can result in a higher monthly income and a better chance of maximizing lifetime benefits.
But there is a caveat when experts advise waiting to start benefit checks. Because a deferred claim can take some time to pay off as you will be missing out on years of potential income, many experts advise claiming early if you have health problems and are concerned about dying early.
If this is your situation, it’s important to think carefully about whether filing Social Security checks as soon as possible is really the right step.
Should you apply for benefits as soon as possible if you are not in good health?
The argument for claiming early when you’re in poor health is simple.
If you’re giving up income in exchange for a higher monthly benefit later on, chances are you won’t live long enough to break even. In other words, you should live long enough for the extra money you get each month to make up for the Social Security income you could have had but missed due to delaying your application for benefits.
For example, suppose the standard benefit you would be eligible for at full retirement age of 67 would total $1,500. But if you retire at age 62, you’ll get a 30% discount on this benefit and only get $1,050 a month. So your choices would be to:
- Start receiving benefits at age 62 and receive a total of $63,000 in Social Security income between the ages of 62 and 67 — but stay locked into the smaller $1,050 benefit for the rest of your life.
- Wait until you’re 67 to claim benefits, get an extra $450 a month once your checks finally kick in, but lose the $63,000 you could have had if you claimed earlier.
The key question is, how long will it take for the extra $450 a month to make up for the $63,000 in lost revenue? The answer is 140 months or 11.66 years. If you died before age 78.66 due to your health problems, on the face of it, it may seem like you’re better off at age 62 rather than waiting.
However, there is one factor that you should not forget. Your early claim would reduce the survivor benefits that your spouse would be entitled to after you die. See, if you were the highest earner, survivor benefits could bring in more income than your spouse would have received based on his own work record. But if you claim your benefits early, you reduce the amount of survivor benefits your spouse is entitled to.
Life can be financially difficult for widows and widowers after a spouse dies as the household goes from two Social Security checks to just one. You may want to think very carefully about filing an early Social Security claim — even if you have health problems — because you could be leaving your surviving spouse in the lurch.