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3 Reasons It's Stupid To Take Social Security At 62 – Motley Fool



The earliest age to start Social Security is 62, and it's also the most popular time to sign up for benefits. In 2017, about 29 percent of men and 33 percent of women reported benefits of 62, according to SSA.

After years of hard work for every dollar, it seems like a nice treat to suddenly get checks from the government every month. But few people realize how much they change themselves when they sign up for social security as soon as they blow out their 62th birthday candles. Here are three reasons you might want to keep.

  Social security card with $ 100 bill

Image source: Getty Images.

1
. You reduce your benefits for life.

The amount you receive from social security depends on how much you have earned in the workplace and also in the age you are receiving. You can start taking Social Security as early as 62, but if you want the full benefit you are entitled to, wait until your full retirement age (FRA). This is 66 or 67, depending on the year of birth.

As you claim early, SSA reduces the size of monthly checks to count on the extra time you gain. By applying for 62 means that you only receive 70% of the scheduled performance per check if the FRA is 67 or 75% if the FRA is 66. This process also works the other way. You can delay the benefits past FRA, and your checks will continue to grow until you reach the maximum benefit of 70 – 124% of your scheduled benefit for a 67 or 132% OFF for a 66 on 66.

To give you a The idea of ​​how much you can lose by starting benefits early, let us consider the average $ 1,470 per month. If you qualify for this amount of FRA from 67 and you require a performance of 90, it's a total of $ 405,720 over the lifetime. Starting benefits at 62 will get you only 70% of the $ 1,470 per month, or $ 1,029 per month. If you require benefits until you are 90, you will end up with a total of $ 345,744. There is a difference of almost $ 60,000 – enough to cover a year or two of living expenses for most retirees.

2. SSA can reduce your benefits if you still work.

Those who wait for their FRA to demand social security can do so without fear that the government is reducing its benefits, but this is not the case for those who are beginning to claim early. In 2019, for every $ 2 you make over $ 17,640, SSA will take $ 1 from your personal injury check if you claim benefits and below FRA for the entire year. If you come to FRA in 2019, SSA will take $ 1 for every $ 3 you earn over $ 46,920 if you exceed this amount before reaching FRA.

The good news is that the retained dollars are not gone forever. When you arrive at FRA, the SSA will calculate the benefit amount for the months it reduced or withheld your benefits. So checks will increase a bit, although they probably won't be as big as if you had been waiting for your FRA to begin to claim benefits.

3. Your pension savings must last a long time.

Many claim social security in 62, so they can afford to retire earlier, but many of the same people have small witch eggs that won't last them the rest of their lives. A 2017 Government Office Office Survey found that the average pension savings for adults 55 to 64 was $ 107,000. All retirement savings targets are different, but not nearly enough for most to enjoy a comfortable retirement pension.

We can never know how long we should live, but people live longer and longer. One in three 65-year-olds can expect to live above 90 today, and one in seven will live above 95, according to SSA. Social security was never meant to cover everyone or even most of a pensioner's expenses, but it can help supplement your existing savings. Your benefits will not go so far when you start social security at 62, but you run the risk of surviving your pension savings.

Sometimes you have no choice but to start social security at 62. You or your spouse may be unable to work, and you may need to start benefits to make ends meet. But if you have a choice, it is better to postpone social security to FRA or even 70. This will make a significant difference in the benefits you receive during your life, and that can help you stretch your personal savings a little longer .


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