If you’ve paid into Social Security during your working years, then you will likely be entitled to Social Security retirement benefits. However, when you are allowed to start collecting benefits and what the consequences of collecting benefits early (or late) may be are often misunderstood. Here’s a look into what you need to know about collecting your Social Security benefits early:
How Is Full Retirement Age Decided?
Full retirement age is the age at which the Social Security Administration allows a person to start claiming their full benefit amount. Your full retirement age is determined by the year in which you were born. For example, a person born in 1960 has a full retirement age of 67.
Regardless of your full retirement age, however, you may start claiming benefits as early as age 62 or as late as age 70.
What Are the Consequences of Collecting Benefits Early?
While you can start collecting your Social Security retirement benefits as early as age 62, doing so may not be within your best interest. This is because you will not receive your full, unreduced benefit amount until you reach full retirement age. If you start collecting your benefit early, your benefits will be reduced monthly in proportion to the additional months for which you’re claiming them. On the flipside, if you wait until after your full retirement age to start collecting benefits, your monthly payments will be larger.
So Is Collecting Benefits Early Ever a Good Idea?
In most cases, waiting until you reach full retirement age to start collecting benefits if not longer is a wise idea. However, there may be some cases where collecting benefits earlier than full retirement age is a good idea. For example, if you are in poor health and don’t expect to live into your 80s or 90s, collecting benefits earlier can provide you with the financial benefits you need.
It can also be smart to start collecting early if you need the money. Not everyone has saved up for retirement, and if retirement rolls around and you don’t have enough in savings, Social Security can provide a lot of economic relief.
How Do I Know What’s Best for Me?
Each person’s situation is entirely unique, and knowing when you should start collecting Social Security benefits will vary on a case-by-case basis. To learn more about what’s right for you, you should meet with a financial professional and start planning for your future. At Harvest Financial Planning, LLC, we provide financial planning services you can count on. To schedule a consultation to discuss your financial situation and your options today, please call us or send us a confidential message online.