Should You File for Social Security Early?

​Thinking about when you should file for Social Security benefits? It’s an important decision, because it’s permanent. Once you start receiving benefits, you can’t change your mind. If you file early, you’re likely to see reduced benefit amounts. Similarly, if you delay your filing, your benefit amount will be increased.
 
You’re eligible to file as early as age 62. However, your benefit is permanently reduced if you file at any point before your full retirement age (FRA). Most people reach their FRA between their 66th and 67th birthdays.1
 
However, you can wait past your FRA to file for benefits. In fact, you can delay your filing as late as age 70. For each year you wait past your FRA, your benefit amount increases 8 percent. Conversely, your amount could be reduced as much as 25 percent if you file before your FRA.1

Common advice is to wait as long as possible to file so you can take advantage of the increased benefits. Filing late isn’t right for everyone, though. Below are three reasons why it could make sense for you to file early. There’s no right or wrong answer on when to file. It depends on your unique needs and goals. You may want to consult with a financial professional before making your decision.

You need the income.
Many workers are forced into retirement earlier than they had planned. It could be due to job loss or even disability, or because they need to care for a loved one. If you retired earlier than expected, you may not have many income options. Social Security could be your only reliable income source. If that’s the case, it may make sense to file as soon as possible.
 
It makes little sense to put yourself in a challenging financial situation just to get a higher payment in the future. That’s especially true if you will be forced to take on debt while you’re waiting to file. If Social Security is truly your only income option, it may make sense to file now.

You don’t have a long life expectancy.
An increased benefit doesn’t mean much if you only collect it for a few years. You might have good reason to expect that you won’t live long into your 70s. Perhaps you have a chronic health issue that could limit your life expectancy. Or maybe your doctors have suggested that a long life expectancy isn’t in your future. If that’s the case, it may make sense to file for Social Security earlier rather than later.
 
However, be careful about using family history to predict your life expectancy. Medical treatments and technology have advanced rapidly in recent years. Just because your parents or grandparents didn’t live long past 70 doesn’t mean the same will be true for you.

Over the long term, the aggregate benefit amounts may be equal.
A higher benefit amount is always better, right? Not necessarily. If you wait until age 70 to file, your benefit will be significantly higher than if you had filed at 62. If you file at 62, however, you’ll get the benefit payment for eight more years than you would by filing at age 70. It’s possible those added years make up for the reduced income.
 
A financial professional can help you analyze your options and determine the best strategy. If you’re ready to plan your Social Security decision, contact us at Thomas Financial. We can help you analyze your goals and create a plan. Let’s connect soon and start the conversation.

 
1https://www.ssa.gov/planners/retire/retirechart.html
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov
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