Should I claim Social Security benefits at 62 or wait? Here are 3 solid reasons to start getting paid ASAP
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Americans nearing retirement know the advice all too well: When it comes to Social Security, good things come to those who wait. And those who can’t wait? Their benefits get slashed.
But those reduced benefits can add up. If you take Social Security before full retirement age, you should expect a 30% reduction in monthly benefits, according to Fidelity.
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Yet 2022 Gallup research indicates many take the exit ramp sooner. It found the average retirement age was 61, despite the fact that 62 is the youngest age you can claim your government benefits.
Still, even knowing they could see a 30% reduction in their monthly checks when they do hit 62, these retirees aren’t necessarily making a grave error. Here are some solid reasons to start taking your Social Security benefits as soon as you can.
Health status
Health issues rank high on the list of concerns in a 2021 Gallup poll cited by Experian. Respondents were particularly anxious they could face being disabled, needing an unexpected surgery or be given a serious diagnosis.
While it’s possible you could enjoy an early retirement and your health remains robust, keep in mind that Medicare benefits don’t kick in until you reach 65.
That being said, the thing with unexpected health emergencies is that they’re unexpected. And they can get expensive. Having a regular stream of income can mean the difference between being able to manage anything that pops up and having to go into debt to cover medical bills.
Debt
Debt doesn’t discriminate based on age. At the end of 2023, Americans’ credit card balances sat at $1.13 trillion, a $50 billion increase from the year before. Ideally you’d pay off all debts before you decide to retire, but if Social Security can help wipe out stubborn credit card balances, that’s a good solution too.
You can make the task of paying off debts a bit easier by consolidating them with a personal loan from Credible. Credible’s online marketplace of vetted lenders provides personalized debt consolidation loan offers based on your needs, so you can pay off your debt faster and at a better rate in preparation for retirement.
Tapping into your home’s equity is another great option for older homeowners. With Rocket Mortgage, you can secure a cash-out refinance loan and make use of all that valuable equity you’ve been building up for years. Essentially, by refinancing with another loan, you’ll gain access to a lump sum, which you can then use to rid yourself of debt before your golden years.
With Rocket Mortgage, it takes just three minutes to get a credit approval and brings you one step closer to finding the best cash-out refinance offer for you.
Read more: These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how
Your partner earns enough for you both
If your spouse claims full Social Security benefits at retirement age, you can then claim 50% of their benefits.
First, take a good hard look at what you earn. If 50% of your spousal income is more than 100% of your income, you might as well go ahead and just retire to live out those golden years dreams.
That being said, you shouldn’t count on receiving a double payment if your spouse passes before you. If you’re entitled to both a retirement benefit and the survivors benefit, you’ll receive only one — the larger — of the two amounts.
To offset any Social Security income losses when your spouse passes, a life insurance policy from Fabric can make all the difference. Fabric is a company offering affordable term life insurance and free wills for you and your spouse to help lock down your family’s security for the long haul.
All you need to do to get your free policy quote is answer a few questions about yourself. Depending on what kind of coverage you’re looking for, you can be approved within minutes and sleep easy knowing you’re covered. And if you ever have any questions, the Fabric app connects you directly to the company’s customer service.
Bottom line: Get a second opinion
So is 62 the magic number?
If you're not sure that it is for you, you're not alone. Data from the Federal Reserve Board shows only 40% of working Americans feel confident about their retirement savings.
One of the best ways to get a handle on where you stand for retirement is to get some expert input. Working with a financial adviser is often a smart move, and the sooner you get started, the sooner you'll be able to put those nagging thoughts to rest.
With WiserAdvisor you can get matched with professionally vetted financial advisers tailored to your financial needs and goals. All you have to do is answer some simple questions and WiserAdvisor will connect you with two to three personalized matches.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
