If youโre getting close to age 62 and thinking about claiming your social security benefits, there are a few things you need to know before you act, so you donโt later regret your choice.
Motley Foolโs recent article entitled โ3 Reasons Retirees May Regret Claiming Social Security at 62โ explains that there are three reasons why you may regret getting your checks when you turned 62.
1.You outlive your life expectancy. Social Security is designed in theory for you to get the same income over your lifetime, no matter if you begin getting benefits early, claim them late, or start them on time. Early filers receive more but smaller checks, because of early filing penalties. Late claimers get fewer and bigger checks, because they donโt claim them until theyโre older. However, everyone dies on schedule, and if you outlive your projected lifespan and you claimed Social Security at 62, each month you live beyond your life expectancy, is a month in which you miss out on extra income. Your total lifetime benefits could end up much larger, if you receive a lot of checks beyond the point when you wouldโve broken even for delaying benefits.
- Your medical care is too expensive. Medical care is very expensive for many retirees. There is out-of-pocket spending for Medicare premiums and prescription drug costs that arenโt covered. Many of these substantial healthcare costs are incurred late in retirement, when your health has started to decline. Unfortunately, for many, their investment account balances are low at this point after years of withdrawals. If you find that your savings are running short and you canโt afford costly care, you may regret that you claimed your money early and minimized the amount of your Social Security checks.
- Your spouse winds up with lower survivor benefits. If youโre the higher-earning spouse, taking your Social Security benefit may potentially result in leaving your spouse in a pinch, if you die first. Thatโs because filing at 62 would mean lower survivor benefits. You should think about the effect on your spouse, if you file benefits ahead of schedule.
Ask an attorney to work the numbers for you. In some cases, for married couples, itโs frequently best for a lower earner to begin their benefits early, if the money is needed for household income. The higher earner can then wait to claim benefits as long as possibleโideally to age 70โto maximize the survivor benefits.
Take your time and think carefully about when to claim benefits. You donโt want to regret your choice, especially if itโs at 62.
Once you claim your Social Security benefits early, your income is going to be smaller for the rest of your life, unless you can undo your claim. You donโt want to look back and wish youโd waited or regret not considering all of the ramifications of starting benefits at 62. Even so, you may determine that claiming right away at age 62 still makes sense. However, understand the negatives before you make this choice.
Reference: Motley Fool (Aug. 17, 2020) โ3 Reasons Retirees May Regret Claiming Social Security at 62โ
