Should You Take Social Security Early After All?

retirement income

One of the most common pieces of financial advice given to 50 and 60-somethings is that you should wait until you’re at least 65-67 to take out Social Security. However, new research from the Journal of Aging Studies found that seniors who had filed for Social Security benefits early expressed remarkable satisfaction with their decisions to file early (about 45% of the focus group respondents had filed at age 62; the rest filed before Full Retirement Age at 65-66 years old).

This new study contradicts everything you might have heard about the “dangers” and “risks” of withdrawing your retirement funds early. So, what is really the best option, then?

According to the study, respondents who withdrew early were most concerned about their financial situations and longevity, which suggests your own decision to withdraw Social Security is largely a personal matter. For example, if your finances are stable, you’re in excellent health and your family members have lived well into their 90s and beyond, then you might want to wait it out.

Should You Take Social Security Early?

On the other hand, if you have a family history of lower-than-average lifespans, your health isn’t in the best shape, or you’re struggling to make ends meet before you reach Full Retirement Age, then withdrawing early could work to your advantage.

To help you determine when you should retire, here are some things you must consider before finalizing your decision.

Get Money When You Need It

Were you recently laid off or worried about your job getting replaced by workforce automation or younger workers in the coming years? If you’re close to retirement and experiencing a radical change in your income situation due to job loss, then withdrawing from Social Security early on could help you stabilize your finances without struggling with a job search, job-hopping or desperately searching for lucrative side hustles a couple of years before you expected to retire.

Social Security is designed to make relatively equal payouts to those who live “average” lifespans, which explains why monthly benefit amounts are reduced the earlier you withdraw (to account for the extra payments you’re receiving at 62/63 compared to someone who waits until they’re 66/67). Filing for Social Security at age 62 will result in an average 30% reduction in your monthly benefits or a 25% reduction for filing at age 63 and 20% reduction at age 64. By the time you file for Social Security at age 66, you’ll only lose about 6.7% from the amount of full benefits.

It may seem like waiting is the best option when you do the math, but if you need money right now due to job loss, unexpectedly high expenses, or any other urgent reason, then filing early could be a better option, given the circumstances.

The “Re-Do” Option

The best part about filing for Social Security early is that you can change your mind within 12 months and re-file later on for full benefits. You do have to pay back any benefits you received during this timeframe if you want your early filing to get off of your record, which means an early withdrawal of Social Security essentially functions as a short-term loan.

This option is ideal for early 60-somethings who need money to cover their regular or emergency expenses but still want to wait until Full Retirement Age to maximize their Social Security benefits.

Consider Your Personal Health

Few people actively enjoy planning for long-term health concerns and thinking about their own mortality, but as uncomfortable as these subjects may be, it’s incredibly important to plan for the future as much as you can while you’re still able to. Obviously, maintaining good health is a goal many of us share, but there’s no guarantee you’ll live past 80 or even 70 years of age.

This means that filing for Social Security early could be advantageous because you can access the money sooner, rather than waiting it out in hopes that it’ll pay off big for you later (again, there’s no guarantee how long that may last – it’s just an unfortunate fact of life). You may lose out on some of your benefits by withdrawing at age 62 or 63, but you’ll still be able to trim your retirement income gap by withdrawing early and setting the money aside for emergencies and other expenses you may incur throughout your 60s.

Should You Wait Social Security Out?

There is no clear-cut answer that can be applied to everyone when it comes to the question of, “when should I file for Social Security?” It largely depends on your own circumstances, including your current (and projected) financial situation, your personal health, your family history of shorter or longer than average lifespans, and how much you’ve already saved for retirement.

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