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6 Good Reasons to Collect Social Security Early

Category: Social Security

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)

Posted by Admin on April 13th, 2022

23 Comments »

  1. I had hoped to retire early. I took many factors into consideration.

    Then something happened I hadn’t planned on. At 60, I was permanently disabled by a stroke. (Non-smoker, low cholesterol, no family history, etc.)

    SSDI pays a little more, and I got on Medicare early.

    Things could be a lot worse, but I do *not* recommend this.

    Seriously, planning is valuable, but you can never know what tomorrow holds.

    by Scott L — April 14, 2022

  2. One thing this article does not mention that some people do have savings, but do not want to use it exclusively for living expenses in lieu of taking Social Security early.

    Although I know a person can gain 8% a year from full retirement age to age 70, how many people have that kind of savings to withdraw?

    As an example, if a couple each collects a Social Security check of $2,000 a month or $4,000 a month for two, in a year that is $48,000.

    If that couple started collecting SS at age 63 without COLA adjustments, in 7 years’ time, that would equal $336,000.

    Now that same couple’s lifestyle needs more than $48,000 a year. They need $83,000 to live per year. They need another $35,000 added to the $48,000 equaling $83,000.

    So, waiting till age 70 to collect SS, would be $83,000 a year, pulled out of savings, for 7 years (age 63-70) would be $581,000.

    By taking SS early, getting $336,000 over 7 years’ time, this couple would only have to withdraw $245,000 ($35,000 a year for 7 years) from savings, rather than $581,000 ($83,000 a year for 7 years) by not taking SS early. In the meantime, the $35,000 is being withdrawn yearly and the remainder in the bank is still getting interest.

    Then you have to factor in life expectancy, illness. All unknowns…

    I would imagine that the percentage of people waiting till age 70 to collect SS is very, very low. Only people with huge retirement funds could afford to do it.

    Then you have to think about the breakeven point, which would be somewhere around age 78-80.

    We started collecting SS early and only have to pull a small amount from savings each year. It has worked out great and we still have a nice nest egg.

    Another thought is that if you have heirs and want to keep the bulk of your savings intact, use SS money as a way to preserve your cash. There is no guarantee on SS money. Once you die, the checks stop. If you don’t use much of your savings, you can pass it to your heirs. You can’t pass SS future uncollected checks to anyone because that option does not exist.

    To each his own on what is best on collecting SS. We have chosen our path and have not looked back.

    by Louise — April 15, 2022

  3. Sorry for your abrupt transition, Scott. Your last statement is important for all. Two of the above particularly applied to us when we retired at 55 (my break even was 84, we expected to earn more from investments,12%, than SS 8%). But years of preliminary as well as intensive “at the time” planning were what allowed us to pull it off. We still retired on a “shoestring”, but with some luck it worked well for us. (I’ve always believed that you can make your own luck by trying to put yourself on the luck train tracks as you apparently tried to do.). Best of luck to you!

    by RichPB — April 15, 2022

  4. Louise, we were writing at the same time. Your explanation closely described our circumstances.

    by RichPB — April 15, 2022

  5. A couple things to remember if thinking about drawing SS early to preserve your savings/investments for later in retirement.

    1. When you hit 70, your savings/investment withdrawal rate will be significantly higher than if you waited to draw SS, so the rest of your lives you’re depleting it faster.

    2. To keep up with SS income growth rate, your annual investments must return 8% PLUS inflation, which is closer to a 10-11% return (ignoring the recent inflation spike). SS builds in a COLA; your investment portfolio doesn’t. To get these kinda returns takes risk of loss which you may not want in later years.

    In all cases, continuing work, getting a p/t job or trimming your spend can be applied. And some folks can work the tax angle to their benefit depending on where they are and what their savings/investment portfolio looks like.

    Everyone’s palate for risk and spend is different, but good planning gives more control over retirement years.

    by Greg W — April 15, 2022

  6. The flaw – as I see it – with both spouses drawing early is the very strong likelihood that one will outlive the other. Borrowing Louise’s numbers, a surviving spouse’s SS income would be halved to $2000 per month, presenting a $50K annual deficit against living expenses, even presuming expenses dropped to $72K rather than $83K per year.

    Most people I know who delayed SS benefits didn’t all have huge retirement funds; they continued working. In my case, DH & I moved from full-time work to part-time consulting, mostly from home, at age 65. I filed for SS at 65, DH filed for spousal benefits when he turned 66,.

    Our retirement nest egg is nearly intact, our time is mostly our own, and when he turns 70 our combined SS will be enough to cover our daily expenses plus a little extra. We’ll draw from our savings to cover additional wants and needs.

    Assuming one of us predeceases the other, the survivor should be able to manage fairly comfortably on DH’s SS benefits plus draws from savings, even if that person lives for many years.

    To us, delaying his benefits until age 70 is a type of life insurance policy for the surviving spouse.

    by JCarol — April 15, 2022

  7. JCarol Please explain the $50,000 annual deficit. If one spouse dies, from my numbers, the spouse who died would no longer be contributing $2,000 a month or $24,000 a year.

    Also, don’t understand the presuming cost of living from $83,000 to $72,000. Where do those numbers come from?

    My Mother left me an inherited IRA and we only take minimum distributions each year. So far, the original inherited amount has almost stayed the same even with taking the required minimum distributions for the last 10 years.

    by Louise — April 15, 2022

  8. Yes – same logic as Louise explained is why I took social security early due to previous health issues and not having to use my invested retirement savings. I earned it after 40 years of working so I decided not to wait. Plus a financial advisor supported that plan too.

    by JoannL — April 16, 2022

  9. Greg W, assuming your item 1 refers to the Minimum Required Distribution, your statement is misleading. While the MRD will be in effect, a person can transfer any or all to taxable investments. We are now 74 and have done that based on circumstances since starting MRD.

    And it’s been said numerous times that the decision on whether to take SS early should be based on person situation. There is more to it than just deciding to take the money and run. What Louise and I both said is to evaluate your total financial situation. And Scott L said to plan your future even if events interfere.

    by RichPB — April 16, 2022

  10. Louise,

    The scenario you described is exactly what I am doing and have since I was almost 64 due to a job elimination. I had no choice but to claim SS early and I did not want to use my savings. This was the best choice for me. I also work part-time to help supplement my savings. You are right that once a person dies, their pension (if they have one) often stops and the SS benefits certainly do. I am a single, divorced woman and I am looking at it from that perspective.

    by Jennifer — April 16, 2022

  11. Hi Louise,

    Sorry if I wasn’t clear. I was using your hypothetical example of $83,000/annum in living expenses for a couple who each opted to draw SS at age 63, receiving $24K each.

    Then I guessed at the reduced living expenses after the death of one partner. Expenses are mostly fixed, particularly in that budget range. Auto insurance, food, gifts, travel, and entertainment costs drop somewhat, but not by half. Everything else remains about the same unless the survivor moves or makes other radical living situation changes.

    There’s not much point in running through all the math because it’s easily accessed on the web and most people visiting this forum have already made their SS decisions.

    Suffice it to say that the SS break-even point comes at age 78, no matter what age one starts benefits. CDC actuarial tables predict that men who’ve made it to 65 (on average) live 18.1 more years (to 83), 20.6 longer for females (to 85-1/2).
    https://www.cdc.gov/nchs/data/hus/2018/004.pdf

    We all have to find the path we’re comfortable with financially and make our best guesses at the likely longevity of both spouses. My parents and in-laws all lived into their 90s. DH & I are both in very good health so chances are excellent that at least one of us will live past 78.

    by JCarol — April 16, 2022

  12. JCarol, Sorry but your explanation still leaves me puzzled on the $50,000 deficit you mentioned if the one spouse who receives $24,000 a year in SS dies.

    I realize that expenses go down, somewhat, with insurance and other things when one spouse passes away. The expenses that go down reduce the cost of living.

    I also would not say that most people on this forum have already made their SS decisions. People come here to learn what people have experienced and like to see what might work for them. People can read the pros and cons and make up their minds. That is what this forum is for, to share ideas and information so people can learn what might work for one person might not work for another.

    I know this forum leans towards not taking SS early and to wait till 70 years old to collect SS to take advantage of the 8% a year increase or 32% for the 4 years leading up to age 70. However, life happens and very few people can or do wait.

    Here is a blurb I found: Retirees who wait to claim can get hundreds of dollars more each month than those who take benefits early. However, only 5% of men and 7% of women wait until 70, according to Social Security Administration data. About half of Americans take Social Security before full retirement age, often because they can’t afford not to.

    When people reach their 60’s, life is unpredictable. So many people’s jobs are downsized and finding a job when older is not easy. Some people do not have desk jobs and work in very physical jobs and out in all kinds of weather. Physically, they just can’t do it anymore. Illness can cut careers short. A sick spouse might require the other spouse to quit their job to care for them. I know a woman who quit her career short to care for her ill elderly father. I am sure many of us can add to this list of reasons why people can’t work till age 70. Then there are people who are just tired of the rat race and want out. It might be foolish for those who are healthy, can work and also have no savings, to not continue to work. So many scenarios.

    In any case, it is best to live a frugal life and downsize if you can. Tighten the budget. Call insurance companies to see if rates can be reduced once retired. If you have extra vehicles, decide if you really need them all. Sell the mega home and buy something smaller. Buy food on sale when you can. There are tons of ways to cut expenses.

    by Louise — April 17, 2022

  13. Louise, please let me try again.

    The hypothetical scenario you constructed had a couple with annual expenses of $83K and SS income of $24K each (both taken at age 63), resulting in a shortfall funded by savings of $35K

    $83K (expenses) – $48K (SS X 2) = $35K (shortfall)

    What I’m saying is, should one spouse die the numbers change as follows:
    $83K (expenses) – $24K (SS X 1) = $59K (shortfall)
    $74K (expenses reduced by 12%) – $24K (SS) = $49K (shortfall)

    While the survivor’s expenses will be reduced if a spouse dies, most people’s big expenses are fixed. Looking at my own budget, I’d guess – at most – a drop of 12% in expenses due to somewhat lower auto insurance, food, travel, and entertainment costs. Thus the $49K shortfall rather than $59K. You might estimate differently, but my widowed friends have said their living expenses went down surprisingly little after the deaths of their spouses.

    Agreed it would be difficult or impossible for most people to fully self fund 5-8 years of early, full retirement. That’s why DH & I (and many others) chose part-time work during these years. The strategy I described in my first post (above) was designed to keep our retirement savings mostly intact and maximize the larger SS benefit by delaying it until DH turns 70, at which time we plan to stop working.

    When we claim his SS, our combined SS will mostly cover our expenses, allowing our nest egg to remain in good shape. In the strong likelihood one of us predecease the other, the survivor will have DH’s greatly increased SS benefits for the remainder of his/her life plus most of our savings. The survivor will therefore not be under the financial gun to move from our family home or make other severe lifestyle changes.

    Losing the partner with whom we built a life and family would be terrible enough without adding drastic life changes due to financial pressures.

    While there are numerous website articles and calculators on the web, you’re surely correct that people are also interested in reading people’s personal experiences and strategies for retirement and SS benefits.

    by JCarol — April 17, 2022

  14. JCarol, Now, I can see where your numbers are coming from, but this hypothetical couple never considered this $35,000 as a deficit. It was a planned yearly income from their savings to continue whether one spouse died or not. So, the only income deficit would be the $24,000 from the one spouse who died.

    $35,000 (savings withdrawal) plus $24,000 (SS X 1) = $59,000 (total new income after death of spouse)

    $83,000 (total income yr.) – $59,000 (total new income after death of spouse) = $24,000 shortfall

    Your estimate of reduced expenses by 12% ($83,000 reduced to $74,000)

    $74,000 (total income per yr.) – 59,000 (total new income after death of spouse) = $15,000 shortfall

    by Louise — April 17, 2022

  15. Thanks for your input everyone – this has been lively! As many have said, when to collect is a personal decision based on your own situation and assessment. Most take it early, only a small percentage waits till age 70, and that generally is the group that is the most well off to begin with.

    by Editor — April 18, 2022

  16. Thank you for this discussion as it is very helpful to learn of ideas from others real life experiences.
    For those of us with a state pension or other pension that then triggers the WEP and GPO-Social Security is not anything to live on.
    Can we have a discussion/thread on this topic? Or it might be too technical. I would be curious to know how many other people in their 60s and older are dealing with this topic.
    Also the Topic of using Life Insurance as a Tax Free Legacy tool and a safe money bucket ie. Indexed Life Ins.

    Editor’s Comment: Thanks Sus. For our Blog and some discussion on WEP go to https://www.topretirements.com/blog/financial/knocking-down-some-windfall-elimination-provision-wep-misconceptions.html/ At this point we don’t have a specific blog about Life Insurance.

    by Sus — April 18, 2022

  17. RichPB, the increased withdrawal rate from savings/investments at age 70 i referred to in my above point 1 wasn’t RMD (which starts at 72), but rather the $ needed to make up the difference between early SS payments and delayed payments. These monies are to meet one’s chosen lifestyle. RMD comes into play in any case, and leads to the need to do tax planning as part of readying for retirement. If one’s RMD is greater than what’s needed to meet their lifestyle, it can certainly be reinvested in after-tax basis. But they first need to make up the SS payment difference.

    These and other factors are very individual to everyone’s situation, health and risk tolerance.

    by Greg W — April 18, 2022

  18. I am only 53, but I love this website! My better half and I are looking forward to retirement in stages starting in about 5 years. Part-time work for both from 58 thru 62, then probably shut down the work thing entirely at 62…but who knows for sure?

    Things could change…BUT…we plan to follow the model shown to us by our friends and neighbors down the street. They, like my wife and I, are educators from PA and as a result have some pretty solid DB monthly pension payments to go along with some decent savings. My neighbors took early SS at age 62 and used those dollars to buy a second home in FL. Living on their pensions entirely, but using their SS monies to pay the mortgage on the FL home they were able to pay it off in about 9 years and the house they bought more than doubled in value over that 9 year period. I don’t know all of their numbers, but they enjoyed the FL house 5 months a year for 9 years and also doubled the SS money they invested.

    I plan to give this a try….any thoughts?? I would very much appreciate any thoughts and suggestions!

    by dan — April 18, 2022

  19. Let me just add my 2 cents. A lot of people take SS at 62 BECAUSE THEY CAN. In my 50’s I kept thinking I can not do this anymore so what if I stopped working at 58, 59 , 60, 61, 62, 63, or 64? Well I kept working full time & part time. I am now 65 1/2 and I will retire this year because My Partner is retiring at the end of August. Let me tell you my life & retirement from a “Financial” aspect will be so much better because I worked a little longer. I grew up poor and remember my parents fighting over money & I vowed that I will not be poor again. A quote that influenced me was “Being Poor is Hard. Working Hard & Being disciplined is Hard. Choose Your Hard”. Also “Poor People Don’t Make Poor Decisions, Poor Decisions Make Poor People” I was mocked out my entire life for being frugal & smart with my money. My Life is so much Better today Because I Worked & Saved & Now I Can Give. I just wrote a check out for $1,000 for a Fundraiser For Ukraine.

    by Michael Mroczka — April 20, 2022

  20. Some of these examples went right over my head. We are not rich. We are not poor. We saved as best as we could. Younger spouse I expect to outlive me so we plan now, with me being almost 66, to delay SS as long as possible, hopefully until 70. If govt runs out of SS money, they’re going to downsize your pymt, so having a larger amt means more after the downsizing vs early collection. I’m thinking mostly of spouse who might enjoy a higher amt when I go first. As stated, it will all come down to planning, working hard to save, working as long as you can stand it or have to, then making the best of it.

    by JoeC — April 20, 2022

  21. I started to collect mine at 62, becuase my wife wouldn’t be able to collect mine without a deduction on her government retirement. It’s working out good for us.

    by Richard — April 21, 2022

  22. I am not an expert on what your neighbors did; but buying a house and paying for it with SS funds is VERY CLEVER! Plus, the value of the home has doubled! You can’t count on the value doubling every time but if the home is kept up you shouldn’t lose!

    If you have that pension money you can live on, this could be a great idea!

    I am also thinking taking out a home equity loan, buying the FL home and using SS to pay back the loan would work rather than a mortgage because you can pay different amounts each month if you choose.

    by Louise — May 13, 2022

  23. Thanks for sharing this. If you relocate to a different state, your Social Security benefits will not change. Nonetheless, many states tax Social Security benefits differently. That means that relocating to a new state can affect your bank account balance.

    by John D — May 18, 2022

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