Serious Illness
When you or a family member is seriously ill, most of the rules of smart financial planning are set aside in favor of getting the necessary care for the sick person.
If you are a single person and are not expected to live long, you should take advantage of Social Security benefits as soon as possible. But if the sick person is married, things change. If the sick person was earning a high income, it may be better not to take benefits early, as the surviving spouse will receive a higher benefit.
Job Loss
In an ideal world, everyone saves enough for retirement so that if they lose their job shortly before retirement, they have enough savings in their retirement accounts not to rely on Social Security income. But that is not the reality for most people.
If you lost your job in the last years of your career, it may be hard to find a new job that pays at the same level you were accustomed to. If you have no other means to live and need Social Security income, do not hesitate to apply.
If you are a younger saver, make saving for retirement a priority. Plan for challenges and rejoice when they do not occur.
You Have No Money
Remember that ideal world where everyone saves a significant portion of their income every month for retirement? That does not happen in most cases due to an unfortunate balance of low wages, personal debt, overspending, and insufficient saving. Many people enter retirement with no savings, and once they are unable to work. As of 2020, only 40% of older Americans rely solely on Social Security in retirement. Don’t let a lack of financial planning diminish your Social Security checks for the rest of your life.
Avoid this blunder by developing a saving habit early in life and delaying the receipt of benefits until full retirement age, if possible.
Bad Advice
Go to the Social Security website and you will see a massive amount of laws, regulations, and rulings. Understanding Social Security from A to Z is a nearly impossible task.
Have you ever waited too long at the Social Security office to talk to someone who has little knowledge? Even the Social Security office says that if you want advice on how to arrange your benefits and Social Security deductions, they are not your ultimate source. (To be fair, the Social Security office does not have the time or resources to get a complete financial picture of you. Use a financial advisor for that.)
Sometimes, you do the right thing and seek advice from someone only to find that the advice was incorrect. And now you have to clean up the aftermath of bad advice. In this case, taking benefits early may be your only option.
Social Security is one of those areas where it is worth paying a significant amount for specialized expert advice. It can mean the difference between shedding six figures of income and having it when you need a Social Security paycheck as large as possible.
Return on Investment Analysis Points to Taking Benefits
According to the U.S. Government Accountability Office, “The formula for calculating monthly Social Security benefits is adjusted so that a person living to average life expectancy receives roughly the same amount of benefits over their lifetime, regardless of the age at which they claim benefits.”
If you are having trouble following that, it means the amount you receive should be roughly equal to the amount someone else receives who claims benefits later. The only difference is that your check is smaller because your benefits are spread over more years.
It will tell you
Most experts agree that it’s not that simple, but for some people, it may not be helpful to wait, and a qualified financial planner can help you determine that.
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Sources:
– Social Security Administration. “Survivor Benefits”, page 6.
– National Institute on Retirement Security. “Egg Check: Sources of Retirement Income for Older Americans”.
– U.S. Government Accountability Office. “Challenges for Early Social Security Benefit Claimants and New Health Coverage Options”, page 1.
Source: https://www.thebalancemoney.com/best-reasons-to-apply-for-social-security-early-4582231
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