When Taking Benefits at 62 May be Smarter

When Taking Benefits at 62 May be Smarter

Many Americans assume that waiting until full retirement age (FRA) maximizes their social security payouts. However, Financial Advisor Dan Moisand, stresses that supporting the waiting game may not always be the sensible choice, as he explained in this excerpt:

Social Security

“It may seem like common knowledge that delaying the claiming of Social Security retirement benefits is an excellent strategy for many families. The financial planning profession may understand this, but it is certainly not true for the general public.

The Social Security Administration’s Annual Statistical Supplement 2013 reveals that the most popular age to start retirement benefits is still 62, the earliest age one is eligible to receive retirement benefits. According to the SSA, 37.5 percent of men and 42.4 percent of women claimed at age 62.

Sure, waiting it out until your full retirement age can boost the final payouts, as most financial advisors and accredited social security lawyers will attest. However, two key factors can play a role in making people decide to cash in early: physical health and life expectancy.

The average life expectancy of a typical American is 79.8 years old; 77.4 for men, and 82.2 for women. Based on these alone, Americans might yet be encouraged to hold out until age 70 when benefits are compounded. Still, many Americans are claiming early because it is a form of paycheck for them that helps tide them over from month to month. A lot of Americans, too, find the financial landscape of Social Security too complex to figure out.

The Business and Finance section of Creators.com cited a reader who had asked whether her ailing 62-year old husband should apply for social security benefits early than later when benefits would have accrued. In this case, at least, when health is an issue, the site advised that claiming for benefits sooner than later would have made more sense. The couple could have chosen to hold out until her husband’s FRA of 66 years; instead of receiving $500 monthly today, they would receive $700 if they waited.

The gamble is that the husband would have to live long past the age of 66 to benefit at all from the larger money pot. The fact is, deliberately delaying but dying early before claiming the money can result in substantial or even total loss. Claimants who actually expect to live longer, on the other hand, can afford to wait out for bigger checks.

If you’re at a loss whether to claim early or wait until your full retirement age, learn how you can make the most of your Social Security benefits by consulting with a knowledgeable and experienced social security attorney, such as lawyers from firms like Jan Dils. Delaying your SS benefits does not always mean it’s the better deal.

(Source: Taking Social Security Early Can Make Sense, Financial Advisor Magazine, June 4, 2014)