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attorney Todd M. Villarrubia

Todd Villarrubia

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When Should You Take Social Security Benefits?

Posted On: December 15, 2023

By: Todd Villarrubia

Todd M. Villarrubia, an authority in wealth planning and preservation, brings over 30 years of in-depth, experience to the complex challenges of safeguarding familial and individual wealth. Based in New Orleans, Louisiana, his expertise is not only recognized in the local community but also reverberates within the legal industry.
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The earlier you begin claiming, the less you'll receive each month. Your unique situation will help determine what age is best for you.

The age you file for Social Security directly impacts your benefit. While some ages are better than others, there are important caveats to consider. A recent article from The Motley Fool, “Social Security: These Are the 2 Worst Ages to Take benefits, According to Experts,” explains it all.

You may file for benefits as early as age 62 or after that. For each month you can delay claiming benefits up to the age of 70, the monthly benefit increases. File at age 70, and you’ll get your full monthly benefit amount, plus a bonus of at least 24%.

Everyone’s situation is different, so there is no right or wrong time to claim. It depends on your financial, employment and health situation. However, research has shown some ages are better to start taking Social Security benefits than others. Two ages, in particular, are the worst times to file, but even they come with a caveat.

Researchers at United Income began studying retirees’ claiming decisions before examining how much they earned in benefits over a lifetime. Using the data from the study, which began in 2019, they determined how many claimed the best age to maximize lifetime benefits.

Only 4% of retirees made the optimal decision to earn as much as possible. According to the research, the average retired household will miss out on around $100,000 worth of lifetime Social Security income. A little more than half of all retirees could have earned more by waiting to age 70. Claiming at age 62 or 63 was the only optimal choice for 6.5% of retirees.

From a strictly financial viewpoint, 62 and 63 are the worst ages to begin taking benefits, as retirees who claimed at those ages were the least likely to maximize income. Nevertheless, there’s more to the decision than finances, and there are many situations when claiming early makes sense.

When filing for Social Security benefits at age 62, benefits are permanently reduced by up to 30%. The reductions could be brutal for those who depend on these benefits for most of their retirement finances.

If you have a robust retirement fund and don’t need the money from Social Security, claiming early could allow you to retire a few years sooner. However, many people don’t have the luxury of choosing when to retire. Social Security benefits can make retirement more affordable if you lose your job or health issues prevent you from working. It’s possible to retire in your 60s and delay filing for benefits, but this may mean taking more money from retirement accounts and depleting savings too quickly.

There’s no single right time, since everyone’s circumstances are different. If you can defer claiming until age 70, that’s great. However, consider the big picture when making this decision because there are many instances where claiming early makes the most sense.

Reference: The Motley Fool (Nov. 15, 2023) “Social Security: These Are the 2 Worst Ages to Take benefits, According to Experts”

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