Instances in Which it May Make Sense to Take Social Security Early

• Author: Stephanie Willms
• Posted: 2024-05-01

You can begin to draw on your social security payments starting at age 62 or you can choose to wait until you have reached full retirement age, a number that is determined by the year of your birth. Although there is no hard and fast rule regarding when to begin these payments, most financial professionals advise waiting as long as possible in order to enjoy the higher payout.

However, there are certain instances in which deciding to take these payouts early may make sense. Before you can make this important decision, you will need to fully understand your individual payout rates. Here are a few instances in which it may make sense to begin taking your social security payouts at age 62 rather than waiting for the bigger payments to kick in at age 67.

 

You Are Experiencing a Financial Emergency

Sometimes you may not have much of a choice regarding when to begin receiving these payments. A layoff at the age of 62 might translate to you needing to draw on this money earlier than you anticipated. A financial emergency regarding your health is another reason to consider dipping into these funds.

Lastly, it may be prudent to use this money if you are using your early retirement years to launch a new business venture. Taking some money out of these funds could pay off in the long run if you have confidence in your business plan. Keep in mind that you are allowed to repay these benefits within the first year of withdrawal without penalty.

 

You Have Life-Threatening Life Issues

It may also be a good idea to start drawing on this nest egg early if you know that you have a serious medical condition that could shorten your lifespan. Because the benefits will stop after death, you can do more with the money now and enjoy life if you begin taking them earlier rather than later when your quality of life is not as solid.

Married individuals will want to consider this option carefully if their payments are larger than their spouse's payout. Delaying a payout could translate to a larger survivor's payment to the surviving spouse.

 

You Simply Need the Cash

It may be that you have no other choice than to take the money when you can. Depending on your current retirement funds and your long-term health prospects, you may need to start collecting the money when you can in order to live comfortably. Only you can decide how much extra money you need in retirement in order to live the lifestyle that you desire while balancing this need with your overall financial goals.

 

You Need the Money to Climb Out of Debt

You do not want to go into your retirement years saddled with debt. This situation is a good reason to consider taking your social security payments at age 62. This is particularly true if your interest rates are set to increase in the next few years. It is generally a smarter idea to knock that debt out now before it begins to balloon, even if that means taking earlier payments from your social security funds.

 

You are the Lower-Earning Spouse

Marriage can muddy the picture when it comes to deciding when to take your social security benefits. It may be in the best interest of your family for the lower-earning spouse to begin to draw on these earnings at an earlier age. This is an especially good strategy if the higher-earning spouse is in the position to wait to file for the higher benefit amount. By splitting the difference, the family will enjoy the influx of cash at an earlier age while still receiving a higher benefit later down the road.

It is always prudent to consult with the advice of a professional if you are unsure about when it makes the most sense for you to begin to draw on your social security payments. A trained professional will be able to run through all of the numbers and help you to make a decision that gives you the highest degree of financial peace of mind.