Many people believe that claiming Social Security benefits as early as possible — which is generally age 62 — is inherently bad.
However, the reality is that every circumstance is 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.
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.
Or, at the least, obtain a custom analysis of your claiming options from a specialized company like Social Security Choices. As Money Talks News founder Stacy Johnson details in the video below, he himself got such an analysis.
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 early, you will receive smaller monthly benefit payments over a longer period of time. If you delay claiming, you will receive larger payments over a shorter period.
If you have a short life expectancy, however, 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 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, you can’t reverse the decision to claim Social Security benefits once you start receiving them, and 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 “19 Ways to Make Extra Money in Retirement.”