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For many Americans, social security is the cornerstone of retirement income. According to the latest data from the Social Security Administration (SSA), almost 90% of people over 65 receive the advantages of the program, and these monthly checks provide approximately a third of all retirement income nationally for people over 65. But although the social security net is essential, When you choose to claim these advantages can make or undo your financial image later in life.
While the SSA allows you to claim social security services from the age of 62, pending your full retirement age, which is between 66 and 67 depending on your year of birth, or even up to 70 years, generally means that you get a much more important monthly advantage in return. Always, a significant part of these eligible For social security services, the 62 -year -old file motivated by the desire to retire early or The need for additional income In the early 1960s.
The problem with this, however, is that pretension too early comes with very real risks that can have sustainable financial consequences. So there are a few things that you need to consider before locking social security services as soon as possible.
Find out how an annuity can help fill the gaps left by your social security services.
3 risks that come with the complaint of social security services at 62
Although the idea of obtaining a check as soon as you are eligible may seem attractive, it is important to carefully weigh the disadvantages. Here are three major social security risks at 62:
Your monthly advantage will be permanently reduced
When you claim social security at 62, you don’t just take a temporary haircut on your advantages. You also accept a permanent reduction that will never disappear. Social Security Administration reduces your advantages by around 6.7% for each year before your retirement age.
This means that if your full retirement age is 67 years and you are claiming at 62, you will only receive 70% of your total amount for the rest of your life. Even more worrying, however, is that this reduction also affects the cost of living (Colas) that you receive in the future. Given that the Colas are calculated as a percentage of the current amount of your advantage, starting with a smaller base means lower increases over time, aggravating the financial impact year after year.
Find out how an annuity can help you lock a guaranteed retirement income flow.
You miss delayed retirement credits
Perhaps even more expensive than the penalty claiming to claim is what you lack by not expecting after your full retirement age. For each year, you delay complaint services beyond your full retirement age until the age of 70, you get retired retirement credits worth 8% per year. This means that someone with a complete 67 -year -old retirement age that awaits up to 70 to claim will receive 124% of their full amount.
For a person being entitled to $ 2,000 per month at full retirement age, waiting until the age of 70 would lead to monthly payments of around $ 2480, or about $ 1,080 more per month that you would have by claiming at 62. Over a 20 -year -old retirement, this difference amounts to almost $ 260,000 in additional advantages. These delayed retirement credits stop accumulating at 70 years, there is therefore no advantage in waiting beyond this point.
This could lead to a reduction in survivor’s advantages for your spouse
Your complaint decision does not only affect you. It can also have lasting consequences for your surviving spouse. When you die, your spouse can be eligible to receive survivor’s services depending on your profits. However, if you have claimed early and reduced your own advantages, you also reduce the potential advantages of the survivors that your spouse could receive.
This is particularly problematic for couples where a spouse has won much more than the other. The higher spouse’s complaint decision will not only determine their own advantages, but potentially the financial security of their spouse by impacting their surviving services. In many cases, the optimal strategy implies the delay services for higher people to maximize both their own payments and the possible advantages of survivor.
How to delay the complaint of your social security services
If you are tempted to deposit at 62 years because you need income, there are practical ways to fill the gap until you reach the full retirement age, even 70 years, you can maximize your social security. Here is what to consider:
- First support retirement savings. The use of money from a 401 (K) or an individual retirement account (IRA) to cover the first years of retirement can allow you to delay the complaint and obtain a larger social security check later.
- Consider an annuity. Buy an annuity Can create guaranteed monthly payments that fill the gap until you claim Social Security. This option provides income on which you can count while allowing your social benefits to grow.
- Explore your equity capital options at home. A reverse mortgageFor example, can give you access to the value of your home without requiring monthly payments, providing a financial bridge while you delay the claim services.
- Work part -time. If you are still capable and arranged, the reassessment instead of taking a retirement can provide enough income to postpone complaint services without emptying your savings.
The bottom line
Retracting social security at 62 can look like the next natural step once you have reached this anniversary. However, the decision comes with large compromises, including smaller monthly checks, a greater risk of surviving your money and your complications if you continue to work. But delaying your advantages by a few years can considerably increase your retired financial security. As you weigh your options, just make sure to keep in mind that a bigger social security check is not just more money today. It is the peace of mind for decades to come.
