3 Reasons I Got Social Security Long Before Age 70

If you’re a pre-retiree who has done at least a little research about your eventual retirement income, then you almost certainly know that the longer you wait to claim Social Security benefits, the larger your monthly payments will be.

In fact, the monthly checks cashed by people aged 62 — the earliest age you can claim — are only slightly more than the payments collected by those waiting until the maximum age of 70 to file. This is the main reason why you are often encouraged to wait as long as possible before starting these benefits.

However, there is actually a case to be made for claiming Social Security benefits long before you turn 70. I’m actually thinking of doing this as early as possible. Here are a few (related) reasons you might want to do the same.

1. I collect as much as possible before any interruptions

Let’s be clear that there are no actual plans in the boards right now to cut Social Security. But there is at least broad partisan agreement that Social Security cannot continue in its current form.

Some estimates suggest a rate of 20% will occur without adequate regulation. reduction in payments It will be necessary sometime in the mid-2030s to keep the program alive. That’s before I reach 70 – although not so quickly before – so if the time frame is on target then I’m in luck.

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If at least modest measures are taken to end the bankruptcy process, it’s possible that I can at least start collecting benefits before any real cuts are implemented. I will suffer a possible reduction in benefits, but at least I will enjoy getting every penny I deserve for a few years.

2. I’ll never actually (fully) retire

However, while I can say with some degree of certainty that I will slow down later in life, I doubt I will be interested in not doing anything constructive enough to earn a wage.

Such a plan has its drawbacks. That means earning job-based income after you start collecting Social Security retirement benefits risks reducing those benefits. Especially if you haven’t yet reached what is considered your goal. full retirement age (or FRA), for every $2 in annual employment income you earn above the Social Security Administration cap ($22,320 in 2024), your Social Security benefits are reduced by $1. If you work hard enough and earn enough wages, it’s possible that you won’t receive any Social Security benefits that year.

You’re not actually losing money. See, the Social Security Administration now takes into account the amount of benefits you’re receiving and increases your future benefits as a result. Moreover, if you have reached your full retirement age of 66 to 67 (depending on when you were born), there will be no reduction in your benefits, no matter how much you earn as an employee.

The kicker: If there’s a chance I’ll earn more income now than I normally do, the Social Security Administration will increase my future payments to reflect that higher income. Ultimately, I will continue to pay FICA taxes on this income.

3. I will invest this money that I don’t need yet

Finally – and this is very important – whatever Social Security income I collect, I intend to fully invest it before I actually need it.

It is a difficult number to determine because the underlying inputs are constantly changing. However, the effective rate of return on your contributions to the Social Security fund is generally in line with the average U.S. Treasury yield. This puts them in the ballpark of 2% to 5% depending on the year.

You’ll never see a figure officially touted by the Social Security Administration, as you’d expect from a mutual fund company, investment advisor, bank, or bank. brokerage firm. Even the Social Security program does not operate using such a paradigm. He can’t. Payments originally paid annuities to retired beneficiaries are now largely funded by FICA payments made into the program by previously retired workers. But not only is the size of both groups constantly changing, but it also changes unpredictably.

Regardless, I’m pretty sure I could get at least a slightly stronger return on benefit payments than I would get by delaying my Social Security payments until I’m 70.

Make it meaningful to you

This is just me of course. What works for me may not work for you. For example, instead of stopping my job completely, I have the option of simply scaling back, but your job can only be a full-time position.

I’m also growing a retirement nest egg that I can leave aggressively for the long term. growth investments Even though the market hit a rough patch a few years before I turned 70. I need to have enough work-based and Social Security income to get me through this if necessary. Others may not have such an option.

No matter what, don’t plan on delaying your Social Security payments for as long as possible just because it will lead to larger checks. There’s a lot to be said for the additional flexibility gained by putting that money in your hands sooner rather than later. It depends on what you do with this additional cash once you get it.

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