April 14, 2022 — As anyone who reads this Blog regularly knows, Topretirements is a big fan of waiting as long as you can before you start to collect Social Security. But that is not to say there aren’t many good reasons to take it early, or at least not wait until age 70. Here are six of them.
You don’t expect to live past 80. The break-even age for collecting early vs. waiting until Full Retirement Age or beyond is often debated, and it differs from men to women. In general, if you don’t expect to live past 80, collecting now is probably a good idea.
You don’t have any other good source of income. If you aren’t working and don’t have another source of income to live on, you don’t have a choice – start collecting your Social Security now.
You don’t have a spouse who might live longer than you. People often overlook what their survivor might get in spousal benefits after you die. If they live a long time you want to make sure they get the highest benefit they can so they don’t end up in poverty. But if you don’t have a spouse, or the one you have has a better earnings record than you do, it might make sense to collect early.
You think you can earn more than 8% with what you collect on Social Security. In some recent years, returns from the stock market have been better than the 8% annual increase you get for waiting from Full Retirement Age to age 70. But given the state of the world, most people would probably not feel comfortable guaranteeing earning more than 8% annually from investing their Social Security benefits.
You can use Social Security to pay down high interest debt. If you have high interest credit card debt it might be a good idea to use Social Security to pay off those loans as soon as you can.
You are pretty sure Social Security won’t be able to pay its obligations. By 2034 or so the SS trust funds will be exhausted and current revenues will be able to fund about 75% of promised benefits. Some people think Congress won’t act in time to keep paying benefits at 100%, so they feel they might as well collect now rather than wait for less. So far Congress has wasted its time in stupid party fights, while completely neglecting Social Security, so maybe that is a good bet.
Bottom line. The right answer to when to take Social Security is complex and depends on your unique situation. Don’t accept anyone else’s pat answer – figure it out for yourself. Please share your thoughts in the Comments section below.
For further reading:
What Is Your Social Security IQ (a quiz)