Many people believe that claiming Social Security benefits as early as possible — which generally is age 62 — is inherently bad, since claiming before your full retirement age means smaller monthly payments.
However, the reality is that everyone’s circumstances are different. For some retirees, it makes sense to start claiming benefits as soon as possible.
Following are several situations in which you should not put off claiming your Social Security retirement benefits.
1. You have a short life expectancy
The amount of your monthly Social Security retirement benefit payment is based on a formula that’s meant to be actuarially neutral. That basically means you should receive the same total amount of benefits over your lifetime regardless of the age at which you start claiming them.
In other words, if you claim earlier than your full retirement age as determined by the Social Security Administration, you will receive smaller monthly payments over a longer period of time. If you delay claiming until you’re older, you’ll be getting larger payments over what is likely to be a shorter period of time.
If you expect to have a short life expectancy, it might make more sense to start taking the smaller monthly benefit as soon as you can.
Money Talks News founder Stacy Johnson details one such situation in “2-Minute Money Manager: Should I Wait to Take Social Security?” He writes:
“A few years ago, one of my best friends asked if he should take his pension early, and I said, ‘Hell, yes.’ Why? Because he wasn’t in great shape, health-wise. Both of his parents died young, his siblings died young, and he really needed the money. So, my advice to him was, ‘Take it as soon as you can get it.’ He died one year later.”
2. You need the money
You also might need the money immediately to stay on top of your living expenses.
“You’d be surprised at the number of people who end up retiring before they want to,” says Devin Carroll, founder of the blog Social Security Intelligence. “There are lots of reasons — including being laid off or dealing with health issues — that you have to stop working.”
However, remember that the age at which you claim determines the size of your monthly benefit going forward. In other words, the longer you can postpone claiming, the bigger the benefit you’ll get each month after you do claim.
So, if that sounds good to you, first explore other ways that you could bring in extra income, enabling you to postpone claiming. For example, check out articles like “21 Ways Retirees Can Bring in Extra Money in 2021.”
3. You’ve got kids at home
“Increasingly, people are reaching age 62 and still have minor children at home,” notes Carroll.
When that’s the case, claiming your Social Security benefits early makes sense in that it generally enables you to apply for additional benefits to help you care for minor children. That’s because you must apply for your retirement benefits before you can apply for benefits related to dependents.
4. A higher-earning spouse has health problems
It’s kind of morbid, but when deciding whether to start taking Social Security benefits at age 62, you also need to think about when your spouse might die — and how much he or she makes in comparison with you.
One situation to consider is when the higher-earning spouse has medical problems, says Carroll.
That’s because, after a spouse dies, you may become eligible for survivor benefits (also called widow’s or widower’s benefits) based on the spouse’s Social Security. And if your spouse has a short life expectancy, and you know your survivor benefits would be more than your own full retirement benefit, there may be no reason for you to wait for your full retirement benefit.
To learn more about this subject, check out “Social Security Q&A: How Do Spousal Benefits Work?”
5. A lower-earning spouse is older than you
Maybe your spouse earned much less than you during your working years.
“Their own benefit is going to be lower than yours,” says Carroll. “In fact, their benefit might even be lower than the spousal benefit they’d receive based on your earnings.”
However, as with benefits issued based on your own work history, your partner can only claim a spousal benefit based on your work history after you file for your own retirement benefits.
Add up the cumulative benefits, suggests Carroll. You might discover that your total monthly income is better when you file for your benefit early and your older spouse elects to take the spousal benefit.
A final word: Work with an expert
Before making decisions, though, be sure to work out the math and compare your options. Social Security rules are complex and situations vary.
Also, consider reviewing your situation with a Social Security Administration representative or a knowledgeable retirement planning professional.
At the least, you could obtain a custom analysis of your claiming options from a specialized company like Social Security Choices.
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