Despite the ubiquitous warnings from financial planners, the world will not come crumbling down if one decides to claim Social Security benefits at age sixty-two, the earliest age to do so.
In fact, millions have already done so and many do have legitimate reasons for that decision. However, know that this isn’t for all soon-to-be retirees, as each person’s financial standing is a bit different.
Eyeing Bigger Checks
The one clear fact is that it could be a prudent money-related decision to delay filing for as long as possible—and that advice is fully supported by the Social Security Administration (SSA).
“Workers planning for their retirement should be aware that retirement benefits depend on age at retirement. If a worker begins receiving benefits before his/her normal (or full) retirement age, the worker will receive a reduced benefit. A worker can choose to retire as early as age sixty-two, but doing so may result in a reduction of as much as 30 percent,” according to the SSA website.
“Starting to receive benefits after normal retirement age may result in larger benefits. With delayed retirement credits, a person can receive his or her largest benefit by retiring at age seventy,” according to the website.
Meanwhile, the AARP website notes that “your monthly payment will be 76 percent higher if you wait to start benefits at seventy rather than sixty-two, the earliest possible age.”
But what if one already signed up at age sixty-two? Is there a way to change one’s mind?
Kailey Hagen, an expert finance site Motley Fool noted that “you can change your mind about claiming Social Security as long as it’s been less than one year since you signed up and you return all of the benefits paid to you and any of your family members based on your work history.”
“If you do this, the Social Security Administration will treat you as if you’ve never claimed Social Security, and when you sign up again later, your checks will be larger,” Hagen said.
But be aware that there is a deadline for one to make this decision. If it has been more than a year since filing, then the individual will have to live with his or her decision. Also, some people just aren’t in the financial position to be able to pay back all of the benefits they have already received.
There is, though, another smart route one can take.
“Once you reach your (full retirement age), you can contact the Social Security Administration and ask it to suspend your benefits,” Hagen said. “If you do this, you won’t receive any more Social Security checks until you either request that the Social Security Administration start sending them again or you turn seventy.”
“In the latter case, your benefits will start automatically in the month you turn seventy. Doing this will earn you delayed retirement credits, which increase your future checks,” she added.
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. Follow or contact him on LinkedIn.