Many experts will tell you that the longer you wait to start collecting Social Security, the better. The longer you put off retirement, the more you can expect to collect. However, in some cases collecting early can be the right choice.
How Much Will You Collect?
Consider how much you really need. Will your current mortgage be paid off by the time you retire? What kind of lifestyle were you hoping for? Will Social Security be your sole source of income, or only a part of it? Your monthly check depends on how much you paid in over the course of your life, but the minimum age of retirement keeps going up. For those born before 1954, it was 66, while for those born after 1960, it’s 67. Every year prior to that will cost you about 7 percent. Each year you delay can add 7 percent.
Good Reasons to Collect Early
Your present state of finances may have left you in need of money to help pay off debts or keep up with bills. If so, it might be wiser to start collecting now, rather than wait for years to start digging yourself out of financial troubles.
If you’re in poor health, you might need the money for medical care, such as supplies or prescriptions that require a copay or aren’t covered by insurance. For some people with chronic conditions, living to 80 or 90 years of age just isn’t realistic. If you need the money now, don’t put it off. Should you have trouble collecting, or can’t make the numbers work, consult an experienced social security attorney like Todd East Attorney at Law.
Social Security as an Investment
Another reason to start collecting early is to use that money to your advantage. It’s legal to collect while you’re still working. You may have to pay taxes on the benefits, but Social Security is then extra income you can use to invest in your retirement. You could use it to make payments on a rental property, buy stocks, put it in an IRA, or anything you feel sure will improve your cash flow when you do retire for good.
Future of Social Security
The scary part is that Social Security policies are subject to change. You’ve probably heard it said that with an aging population and people living longer, there eventually won’t be enough money put aside to pay everyone at current or even reduced rates. Especially if the economy enters a recession again, there’s always a chance that the politicians may be persuaded to temporarily or permanently slash your benefits.
Having more money later is small comfort if you’re struggling now. But depending on Social Security as your only source of income 20 or 30 years from now may not be realistic.