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Social Security: Don't Get Stuck Starting Your Engine Early

Social Security: Don't Get Stuck Starting Your Engine Early

April 18, 2024

Social Security is a crucial part of many Americans' retirement plans. But when claiming your benefits, you have to make a big decision: when to hit the gas. While you can start receiving Social Security as early as 62, it might not be the most fuel-efficient route in the long run.

Let's explore the different claiming ages and why waiting until 70 can benefit you:

  • Claiming at 62: This is the earliest you can receive your benefits, but there's a catch: your monthly checks will reduced permanently. Think of it as starting your retirement income with a lower engine power.
  • Full Retirement Age (FRA): This age depends on your birth year but generally falls between 66 and 67. You'll receive full benefits at your FRA, not a reduced amount. Compare this to cruising at a comfortable, steady speed.
  • Claiming after FRA (up to age 70): Here's where things get interesting. By waiting past your FRA to claim, your monthly benefit increases slightly each month. It's like adding a little extra horsepower to your retirement income!

Why wait? Here's the math:

Let's say you qualify for a $1,000 monthly benefit at your FRA of 67. Claiming at 62 might reduce that to $700 a month. Sure, you'll get more checks overall. But if you live to 85, you'll receive less total money than if you waited until 70 and received the total $1,000 (plus the increased benefit for delayed claiming).

Remember, Social Security is designed to last your lifetime. Maximizing your monthly benefit will ensure a more secure financial future, especially if you live a long life.

Is claiming early ever a good idea?

There are situations where claiming at 62 might be necessary, like if you have health problems or need the income immediately. However, it's essential to weigh the long-term consequences carefully.

The Takeaway:

Social Security is a marathon, not a sprint. While starting your benefits early might seem appealing, you could sacrifice a higher monthly income. Consider your retirement goals and consult with our advisors here at Dixon Financial Group to determine the best claiming age for your situation. Making an informed decision can ensure your Social Security benefits take you the distance!

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