When should you start to claim Social Security? For many, this is a big decision that causes confusing conversations with partners, friends, and colleagues. Get the decision wrong, and it could be a bad mistake; get it right, and you’ll get the retirement you always wanted.
At the age of 65, Social Security can make up at least half of the average American’s income. As soon as you start claiming underneath the full retirement age, even at 67, benefits are reduced until death. Those in a tricky financial position may claim early, at 62, which has the steepest penalty of all. According to one study from the Bipartisan Policy Center, monthly benefits can fall from nearly $1,260 to $700 when claiming at 62 as opposed to 70; the study was based on an average worker expecting benefits of $1,000 at the age of 67.
If you can wait, you’ll get rewarded with Social Security. Just because you can claim at 62, this doesn’t mean you should. The earlier you start claiming, the longer the fund has to last, and the smaller your monthly benefits. However, the sad problem with Social Security is that many myths and misconceptions affect older workers’ decisions. We’re going to explore some of these myths today!
‘I need to claim when I stop working’
We understand the premise, but you don’t need to start claiming Social Security as soon as you stop working. At 62, you can continue working without claiming benefits. Likewise, you can stop work and still not take benefits. Before making a decision, it’s good to know all the options available to you while also considering your life position.
For example, you should think about your health. If your life expectancy is shorter than the average, you might want to start claiming early. If you have a spouse, the situation changes again because waiting will increase benefits for those left behind. Don’t forget, Social Security is designed to help in retirement, and you may have increased healthcare costs in the future. Try not to take the monthly benefits until you need them.
‘Older workers will receive benefit cuts soon’
With the COVID-19 pandemic, it’s natural to feel nervous about Social Security, working life, and finances. After this devastating year for the economy, it seems that predictions for Social Security’s demise are getting closer and closer. While some say 2032, others believe the program will be depleted by 2028.
After hearing this news, you might panic and immediately start withdrawing in case this money disappears in the future. Again, we understand the concern, but you shouldn’t take action too early. If you’re close to retirement, there are all sorts of reform proposals for the Social Security program. At the moment, anybody nearing retirement are safest from potential cuts and losses.
‘I should use my break-even date to decide when to claim’
When people talk about Social Security, you’ll often hear them mention break-even dates. Essentially, this is an estimation of the total amount you’ll receive if you either wait or take the benefits early. However, you won’t hear that field offices around the country have removed these calculations from their advice when helping near-retirees.
Sadly, people were told that they would be ahead until a certain age. This sounds great, but it fails to mention being behind from that point forward. Instead, we recommend listening to our advice that waiting can boost the benefit amount significantly.
Now you know these three myths, you’re in a better place to make a strong Social Security decision!
