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Should You Collect Social Security Long Before Turning 70?

Stimulus Check
President Joe Biden signs a bill, S. 579, to make a technical correction to the ALS Disability Insurance Access Act of 2019 which retroactively gives access to Social Security disability benefits for individuals with ALS Tuesday, March 23, 2021, in the Oval Office of the White House. (Official White House Photo by Adam Schultz)

It has been well-documented that waiting till age seventy to file for Social Security benefits will yield the absolute maximum payout—currently $3,895 per month.

But is choosing to collect the benefits well before turning that age really such a horrendous financial decision?

According to a recent piece by the Motley Fool, a private financial and investing advice company, waiting till seventy to claim the benefit is “not the right choice for everyone—despite the fact that delaying earns you bigger checks.”

It continues: “In fact, there are plenty of circumstances when you’d want to start your retirement benefits much sooner—even as soon as sixty-two when you first become eligible. … The single best reason to claim Social Security well before age seventy is if your claim for benefits enables a higher earning spouse to delay their claim for benefits.”

In that particular situation—an individual who is married and makes less than their spouse—it makes sense to collect early and let them wait to start theirs.

“Delaying a higher benefit has a bigger payoff. Early filing penalties and delayed retirement credits are both applied on a percentage basis. That means the larger your benefit, the bigger the impact of early or late filing,” Motley Fool notes.

“Say your standard benefit is $800 per month and your spouse’s standard benefit is $1,700 per month. If you claim early and are subject to a 25 percent early filing penalty, your benefit shrinks by $200 per month. If your spouse claimed early, that same 25 percent penalty would result in a $425 benefit reduction. Likewise, delayed retirement credits applicable after hitting full retirement age are also applied on a percentage basis,” it adds.

Benefits to Surviving Spouse

Another advantage is that if one spouse dies, the surviving spouse will get to keep the higher of the two Social Security benefits.

“By taking this approach, if your spouse dies first, you get more money to live on,” it writes. “This could really come in handy since widowhood can be a huge financial shock.”

“There are advantages and disadvantages to taking your benefit before your full retirement age,” the Social Security Administration (SSA) says.

“The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit will be reduced. Each person’s situation is different,” it continues.

Filing Early

According to AARP, a U.S.-based interest group focusing on issues affecting those over the age of fifty, there are indeed “significant” financial implications for filing early.

“If your full retirement age is sixty-seven and you claim Social Security at sixty-two, your monthly benefit will be reduced by 30 percent—permanently. File at sixty-five and you lose 13.33 percent,” the organization says.

“If your full retirement benefit is $1,500 a month, over twenty years that 13.33 percent penalty adds up to nearly $48,000,” it adds.

Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Written By

Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV.

1 Comment

1 Comment

  1. Dave Nelson

    August 2, 2021 at 12:12 am

    Each year of eligibility that you don’t take the money will a fixed percentage increase to what you could get in the next year.

    With that in mind, if you add up how much money you’ll get each year if you start at any given age, run the numbers out about 15 years and you’ll see the big hook: It takes 13-14 years to receipts before the higher payout will catch up to what you get by starting 1 year earlier.

    So if you are very healthy, wait as long as possible and you should come out getting more in total over the rest of you life. But if you are not healthy and have doubts about lasting 13-14 more years, start taking the payout ASAP. It might not be as much each month but in total you’ll see more as compared to waiting another year.

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