Social Security benefits become available from age 62. Despite the fact that it often a better financial move to wait a while to submit for them, many people start to get their checks as soon as possible. This can make sense for many reasons, including if you need the benefits to enable your exit from the workforce.
But there are also circumstances where early claiming can become a choice that you really regret. Here are three possible situations where this could be your destiny.
1. If you no longer have money at a later age
Many sources of retirement income can run dry. If you work part-time or full-time after retirement, you may lose this job or be unable to do it as you get older. If you depend on savings, your nest egg may run out, leaving you with little or no income.
This can’t happen with Social Security, Although. These pension benefits are guaranteed as long as you live, and due to cost-of-living adjustments, they are somewhat protected from the impact that inflation can have. Social Security is also a very popular program and any attempts to reform it and lower benefits for seniors are unlikely to be successful.
If you have no other income later in life and are forced to live on Social Security benefits, you may really regret making an early claim. Even in the best case scenario when you maximize this income with deferred filing, it’s hard to live alone. If you’ve shrunk your checks significantly, you’ll be in even more financial trouble.
2. If you are struggling to pay your fees
As mentioned above, Social Security doesn’t really provide enough to live comfortably without supplemental income. It’s not designed that way, as benefits are intended to replace 40% of what you earned before retirement.
If you applied for Social Security benefits early and are struggling to pay the bills, you may really regret your choice. A bigger advantage would have given you a little more leeway had you waited, so it might have been easier to live within your means.
Furthermore, if you applied for Social Security benefits before your full retirement age, then you could end loss of some of your benefits temporarily when you have to go back to work to cover the costs. Missing full checks defeats the point of your early Social Security claim, even if you end up having your benefits recalculated later to replace this lost money.
3. If you abandon your spouse
When you claim your Social Security benefits early, it doesn’t just affect you. That of your husband or wife survivor benefits can also shrink.
If you were the biggest earner, survivor benefits can give your widow(s) more income to live on after you die. That’s because your partner gets to keep the higher of the two benefits that both spouses received.
By filing early and reducing your own checks, you could be dooming your surviving spouse to a lifetime of financial hardship once your spouse has to rely on just one Social Security check that ends up being much smaller than he could have been.
In any of these three situations, you would probably have been much better off with a delayed claim. So think carefully about the long-term ramifications of your decision to file early for Social Security benefits and accept a reduced benefit for the rest of your life — and possibly your spouse’s life, too.