For many retirees, Social Security benefits can make the difference between a financially secure retirement and a challenging one. Approximately 64% of retirees consider their monthly checks a major source of income in retirement, according to a report from the Society of Actuaries, so it pays to ensure you're maximizing your benefits.
One of the most important factors to consider when it comes to Social Security is the age you begin claiming. The size of your checks will depend on the age you file for benefits, and the earlier you begin claiming (as early as age 62), the less you'll receive each month. However, there are a few reasons why claiming early can be a smart retirement move.
1. You could receive more benefits over a lifetime
Social Security benefits are designed so that, in theory, you should receive the same amount over a lifetime no matter what age you begin claiming. You'll receive smaller checks if you claim early, but more of them over a lifetime. Delay benefits and you'll receive fewer checks, but they'll each be larger.
However, these calculations assume beneficiaries will live an average life expectancy -- which in the U.S. is around 79 years, according to the Centers for Disease Control and Prevention. If you live a shorter-than-average lifespan, you could actually receive more over a lifetime if you claim early. You won't receive as much each month, but you'll have more time to collect benefits than if you'd waited to claim.
Of course, it can be tough to predict your life expectancy. But take a look at your health and family history, and consider using a life expectancy calculator to get an estimate of how long you'll live. You may not be able to predict your lifespan with 100% accuracy, but getting a good estimate can help you decide when to begin claiming benefits.
2. It can help you make the most of your senior years
Delaying benefits will result in receiving more money each month, but in the process, you're also missing out on one of your most valuable resources: time.
When you've been waiting for decades to retire, you'll want to enjoy your senior years to the fullest. Claiming benefits early will give you a little extra spending money in your early 60s, which can help you make the most of your retirement when you're still relatively young and healthy.
This is especially important if you plan to live an active lifestyle in retirement. Unless you're exceptionally fit, you may not be able to enjoy long hikes or run around the backyard with the grandkids when you're in your 70s or 80s, so claiming early will give you more time to enjoy those activities earlier in life.
3. It can make early retirement more affordable
Not everyone has the luxury of choosing when to retire. In fact, nearly 40% of retirees say they retired earlier than they'd planned, commonly due to unexpected job loss or health issues, according to a report from the Aegon Center for Longevity and Retirement.
Whether you choose to retire earlier or you're forced into it, early retirement can be a financial challenge. Not only do you not have as much time to save, but your savings also need to last longer.
In some cases, delaying benefits can be a good idea because those bigger checks could come in handy once your savings run dry. But not everyone can afford to wait years after they retire to begin claiming benefits. If you retire in your early 60s -- whether by choice or out of necessity -- claiming benefits early can make it easier to afford retirement. It will also result in withdrawing less from your retirement fund, which can help your savings last longer.
Is claiming early the right decision for you?
There's no one-size-fits-all approach to choosing when to file for benefits, and claiming Social Security early won't work for everyone. However, for some people, claiming early can result in a more comfortable and financially secure retirement.
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