3 Reasons to Claim Social Security Immediately | Smart Change: Personal Finances

(Maurie Backmann)

Seniors are often warned to be careful when filing for Social Security. Indeed, your filing age can dictate the monthly income the program will provide you with for the rest of your life.

If you’re in your early or mid-60s, you might want to wait to claim Social Security to increase your monthly benefit. But in some situations, waiting to deposit just doesn’t pay off. And if any of these scenarios apply to you, it pays to claim benefits as soon as possible.

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1. You lost your job and can’t pay your bills without going into debt

Filing for Social Security before full retirement age (FRA) will result in reduced benefits, and the FRA only kicks in at 66, 67, or somewhere in between. And so, if you just turned 62, for example, which is the earliest age to file for Social Security, you might want to delay filing in order to squeeze more money out of the program.

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But if you find yourself in a situation where you are out of work before you hit FRA and you can’t cover your bills just from your savings, then it pays to file for Social Security right away if it saves you of having to accumulate credit cards. debt. Not only can this type of debt cost you a lot of money in interest, but it could also hurt your credit score, making it harder to do everything from getting a car loan to securing a car. lease.

2. You have been diagnosed with a medical condition that could significantly shorten your lifespan

Filing for Social Security early will reduce your benefits on a monthly basis – but not necessarily on a lifetime basis. And if you’ve been diagnosed with an illness that could shorten your lifespan, it might be beneficial to file for Social Security right away.

Let’s say you’re considering a monthly benefit of $1,600 at a 67-year-old FRA, only to discover at age 62 that you may not live as long as expected. In this case, immediately enrolling in Social Security will reduce your monthly benefit to $1,120. But if you end up only living to be 72, you’ll make over $38,000 by filing immediately.

3. You are already 70 years old

Delaying your Social Security filing beyond the FRA will help increase your benefits, but only up to a point. For each year you suspend your claims for benefits, they increase by 8% for life.

But once you reach age 70, you can no longer accrue deferred retirement credits that leave you with higher lifetime benefits. So at that time it pays to deposit immediately and start receiving the money you are entitled to. In fact, if you wait too long beyond your 70e birthday to claim Social Security, you could end up losing money instead of making it.

Sometimes it doesn’t pay to wait

Not claiming Social Security is a decision that often makes sense, but not always. In some cases, it pays to deposit immediately, even if your original plans stated otherwise.

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