Why Take My Social Security Benefits Early?

Beth Misak |

By Paul Hynes, CFP®
March 2019

(This is Part 2 of a series on timing the start of your Social Security benefits.)

You’ve reached your 62nd birthday. Congratulations! You’re now eligible to take Social Security benefits. After all, you’ve been paying into the system your entire working career. 

You’re about to call or go online to tell the Social Security Administration that you want to start receiving your benefits. That’s when you may learn that your “normal” retirement age for benefit purposes is age 67. Further, you learn that taking benefits at age 62 is called “early retirement.”

In our previous article we discussed delaying benefits until age 67, and possibly beyond. In this article, we’ll explore why you might decide to take your benefits early.

If you wait to receive your benefit payments until a future time, obviously you’re not getting the money now. A dollar in your pocket today can definitely help you, vs. a dollar in the future.

What can you do with the dollars now? Maybe you simply need the money to help make ends meet. Or, you can pay expenses out of pocket rather than drawing down from your investments. This allows more of your investments to grow or earn income. Perhaps you want to use the additional money to supplement your lifestyle, such as take another trip to see the grandkids or enjoy a vacation to one of your bucket-list destinations.

Heaven forbid you discover that you have a medical issue. While no one knows the future, a significant health challenge might reduce your chances of reaching a ripe old age. In this case, it may make sense to take your benefits early. The breakeven point for waiting is usually sometime in your mid-80’s.

If you expect a life of longevity, it might make sense to wait, unless you have a sizable pension benefit from work. A pension reduces your longevity risk, which is the risk of running out of money. With reduced longevity risk, it may be safe to take your Social Security benefits early.

Finally, if you are married and are the spouse with lower lifetime earnings, you may want to start taking your benefits early, while your spouse may want to delay until a later time. We’ll go into the various spousal strategies in a future article.

As you can see, Social Security rules are complex and often confusing. You can learn more by visiting the website at www.ssa.gov. And, talk with us. We can help you evaluate some of the more opportune times to start your benefits.

Next time we’ll ask the question, “How should I coordinate my benefits decision with my spouse?”


Social Security Website - www.ssa.gov