2 Big Reasons You Might Regret Claiming Social Security Early | Personal finance

However, this is not the right option for everyone. While there’s no one-size-fits-all approach when it comes to determining age to claim, there are a few important reasons why you might regret taking Social Security early.

The sooner you start applying for Social Security, the lower your monthly payments will be.

To receive the full amount of your benefits based on your employment record, you will need to wait to file your claim until Full Retirement Age (FRA) – which is between 66 and 67 depending on the year of your birth. If you file at age 62, your benefit amount will be permanently reduced by up to 30%.

If you have a solid retirement fund that can easily last the rest of your life, small Social Security checks may not matter much. But if there’s a risk that your savings will run out in retirement, you may have to rely on Social Security as your only source of income.

For most people, surviving on Social Security alone is not easy. The average benefit amount among retirees is around $1,670 per month, as of June 2022. Applying early could cut your payments by hundreds of dollars per month, which can make it even harder to make ends meet. .

Plus, as inflation rises, it’s more important than ever to maximize your retirement income. Social security benefits have lost around 40% of their purchasing power since 2000, according to a report by the Senior League. That means your benefits probably won’t go as far as they used to, and an early claim could potentially exacerbate this problem.

The age at which you start claiming will not only affect the amount of your own benefits, but it could also affect the amount your spouse will receive as well.

When a person dies, the surviving spouse is sometimes entitled to the full amount of the deceased partner’s benefit in survivor benefits. The more you receive, the more your spouse can potentially collect if you die first – and vice versa.

If you have reason to believe that one of you will outlive the other, it may be a good idea for one person to delay Social Security so that the surviving spouse receives larger checks. While not the most pleasant topic to think about, even a few hundred extra dollars a month can do a lot later in life.

Social Security benefits can sometimes be confusing, but understanding how your age affects your payments will make planning for your retirement easier.

Claiming early can be a smart move in some situations, but it’s not ideal in all circumstances. When you are aware of the potential risks of a claim at age 62, you can determine if this is the right option for you.

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