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Taking Social Security Benefits Early
by John M. Roberts

It's a smart move for some people

Not everyone is in the position to wait until full retirement age to start collecting their Social Security benefits. It's not because they are being greedy or not smart enough to know better, but the decision is made because they need the money now.

Those who propose that people wait until full retirement age are not wrong by any means and the points they make for their arguments are right, but not right for everyone.

Many people are simply not able to wait. Their circumstances may dictate that taking their benefits at age 62 instead of waiting until they are 66 or 70 is the right thing for them and taking them as early as possible is a smart decision on their part.

  • Some people just didn't have sufficient incomes during their working years and didn't invest a lot into the Social Security program.
  • Many were in business for themselves and didn't save enough to retire on or didn't invest enough in the stock market to generate a large enough cash flow for retirement.
  • Others lost much of their retirement income when the stock market crashed.
  • Still others lost their homes and/or most of their equity during the housing market bust.

These are just a few of the reasons why many people opt to take their benefits beginning at the age of 62.

The argument stems from the size of the monthly payments you will receive. If you hold out until the full retirement age of 66, you maximize your lifetime benefits which is estimated to be roughly 25% higher than if you take them at age 62. If you hold out until age 70, your benefits are estimated to be about 32% higher. This is great for those who can afford to hold out but not everyone can.

The facts that the experts don't mention is that if you take the payments at 62 instead of waiting until you are 66 or 70, you will actually get more payments over the years, which in turn, may add up to be about the same amount of money you get by waiting. Even though the payments are smaller, in the long run, you may actually come out ahead.

Another important aspect of this is the number of years you may, or may not, live after you turn 62. It's a gamble. If you decide to wait until age 66, or 70, and you die, you may not get any of the money, especially if you are not married or if you are widowed.

The important question for most people stems from necessity. Do you want to get more payments in smaller increments starting at 62 or do you want to wait for fewer payments with larger dollar amounts later in life?

True enough, you may live to be 80, 90, or even over 100 years old. The larger amounts may mean more to you then. If you can afford to wait, it may be a good move on your part to do just that, but if you can't afford to wait and you need the money sooner than later, you should do what is best for you.

In other words, everybody's situation is different. The way to decide when to take your benefits should be based entirely on your needs and not on the opinions of others.

The Social Security Administration has developed a process to calculate when you should start receiving your benefits. This plan is based on how much you've invested in the program, how long you are expected to live, and when you elect to receive your benefits. As with everything in life, there is no guarantees because death can happen to anyone at anytime.

If you are having a difficulties understanding your options concerning Social Security, it may be a good idea to consult a financial planner who specializes in retirement options including Social Security benefits. Your decisions will have a long term effect on your financial stability, especially in your later years.

For more information about Social Security benefits, visit www.socialsecurity.gov or contact your local Social Security Administration Office.

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