Claim It Early or Delay? Deciding When to Start Taking Social Security
Social Security is the largest income source for many retirees and provides a crucial financial safety net for Americans who have contributed to the system for at least 10 years. To maximize its benefits, it's essential to understand how the program works, as its complex rules can lead to costly mistakes for those who are uninformed.
Why Delay Taking Social Security?
Protecting a Surviving Spouse
When planning for retirement, it's essential to consider what happens when one spouse passes away. If the primary earner delays claiming benefits, the surviving spouse will inherit the higher monthly benefit. Even if the lower-earning spouse claims early at 62, they can take over the larger benefit after the primary earner's death.
Maximizing Monthly Benefits
For families without a sufficient retirement nest egg to cover living expenses, working longer—up to age 70—can significantly increase their Social Security payments. Delaying benefits ensures a larger monthly payout, providing greater financial stability.
Why Take Social Security Early?
Retiring Early Without Tapping Savings
Transitioning from saving during your working years to spending in retirement can be psychologically challenging. Early retirees often hesitate to draw down their hard-earned savings due to uncertainty about the future. Claiming Social Security early allows them to cover expenses without immediately using their retirement funds.
Enjoying the "Go-Go" Years
The Retirement Smile concept suggests that retirees tend to spend more money and pursue active lifestyles in the early years of retirement (the "go-go" years). As they age into their 70s, spending typically decreases. Claiming Social Security early allows retirees to take advantage of these active years while still healthy.
No One-Size-Fits-All Solution
Deciding when to claim Social Security involves personal circumstances and tradeoffs. There's no universally correct answer; it depends on your financial situation, health, and lifestyle goals.
The key is having a well-thought-out income plan incorporating Social Security as part of your overall retirement strategy.
