Social Security is an important source of retirement income for 47 million retired American workers, and its importance will only increase as more baby boomers retire. If you are among those who are approaching retirement, you are probably wondering if it is wise to claim benefits early. There are good reasons to wait, but these three reasons can convince you that application for social security at 62 is smart.
1. Your goals are more important than the size of your check
Social Security pays only 100% of the benefits you earn during your career if you wait until full retirement to claim. File for benefits earlier than full retirement age and you're going to get a much smaller check. How much less depends on how many months before full retirement age you start collecting social security benefits, but claiming that 62 can lead to a reduction of as much as 30%.
There is a lot of monthly income to waive, but it can be worth it if you have other sources of retirement income and your pension money list contains an active lifestyle. The average 65-year-old has an expected lifespan in the mid-80s, but that doesn't mean you will be healthy enough in the 70's to live the pension you imagine.
2. Family Benefits Can Make a Difference
Several Americans are entering the 60s with underage children, and if that is the case for you, social security benefits for family members can claim 62 wise.
Children who qualify can collect up to 50% of your primary insurance amount (PIA), regardless of whether you require your claims early. PIA is the monthly benefit amount you can collect at full retirement age prior to retirement age adjustments. To qualify, children must be under 18 and unmarried, 18 or 19 and a full-time high school student, or over 18 years of age and disabled before becoming 22.
Spousal benefits may also be an option. If your child is under the age of 16, your spouse may qualify for up to 50% of your full retirement age, even though he or she is under the age of 62, the earliest age at which spouses can usually claim spousal benefits. But when the child gets 16, spousal benefits will stop unless the husband has reached 62.
However, it is a family maximum, though. Including benefits that you receive, the maximum payable on the job, varies between 150% and 180% of full retirement benefit, depending on the PIA. How to Calculate Maximum Family Benefit for Social Security Benefits:
- 150% of the first $ 1,056 of the employee's PIA plus …
- 272% of the employee's PIA over $ 1,056 to $ 1,524 plus …  134% of the employee's PIA over $ 1,524 to $ 1,987 plus …
- 175% of the employee's PIA over $ 1,987.
The most common age to claim social security benefits is 62 years, but people often do not claim that age due to the two previous causes. Instead, it's because they've had a job loss, or their health has them worrying about dying younger than their average life expectancy.
Social Security has a one-time transfer clause that allows you to claim social benefits and then reverses the decision within 12 months. As a result of early claiming for a job, you can help increase your monthly finances while allowing you to change your mind. One word of caution, though. To reverse your decision, you need to cut Social Security a check for any benefits you have pocketed while receiving it.
In terms of failing health, Social Security is designed to pay you the same amount of lifetime benefits based on average life expectancy, regardless of age you claim. That's why people who claim early have reduced their benefit amount, while people who delay claim to 70, see their benefit increased. If you wait to claim and die younger than average, you can leave the benefits on the table. Conversely, if you survive the averages, you could end up with a windfall in lifetime benefits.
Of course, there is no way to know what the future holds in the store. But if you are in poor health and longevity does not go into your family, then you claim early to collect as many benefits as possible before you die, it may make sense. A word of caution here too, though. If you are married and expect someone to receive survivor's benefits based on the work record, you should know that the survivors benefits will be based on the amount you received, not the PIA. Therefore, if you claim early, your survivors will be locked into a lower income.