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When Does It Make Sense To File Early For Social Security?

Posted by Shanna Tingom, AAMS® on Oct 28, 2015 3:08:40 PM

If you’re like many Americans, you see a deduction on your check for Social Security and don’t really think about it. It’s something for retirees, not for you. I encourage you to think about it today as it can impact your financial planning even if you’re only in your 30’s or 40’s today. The longer you wait to file for benefits, the more financially rewarding it may be.

What is Social Security for retirees?

Social Security is a Federal retirement program providing monthly income to qualified workers. The amount received depends on the recipient’s income while they were working. While most people apply for Social Security between 65 and 67 years old depending on the year they were born, there are cases when it makes sense to file early.

Not everyone qualifies.

Just because you worked and meet an age requirement doesn’t mean you’re automatically qualified to receive benefits. At the publication of this post, you must work and pay a minimum of 40 quarters (10 years) into Social Security if you were born in 1929 or later. Those quarters do not need to be consecutive. Once you meet the work requirement, you can file when you become of qualified age.

When does it make sense to file early for Social Security?

There are a few cases when you may opt to file early for your benefits at the age of 62.

  1. Think as a single, not a couple. Depending on what the benefit amount is, some couples opt for one of them to file early, leaving the other to file when they qualify at 65 – 67 or even waiting until they turn 70 years old. This maximizes the benefits for the couple. If you’re thinking about this strategy, consider your cost of living. If you can pay your bills with one income, it may benefit you to wait for one spouse to file.
  2. You or your spouse are terminally ill. This doesn’t mean that you have bad genes or a family history of cancer, it means you or your spouse are diagnosed as being very ill and will likely not live long into retirement.
  3. Limited or no income. If you have no income, filing early may be your only option that will pay your most basic necessities. This has happened more recently with older Americans being laid off and not able to find work. If you’re healthy and an expert at something, I encourage you to consider being a consultant to make ends meet before having to file for Social Security.

Filing early isn’t always a good thing. While you can by law file at the age of 62, you’re also taking 25% less than waiting a few years. If you can wait until you’re 70, you may even qualify to receive more than what’s on your Social Security statement.

At Heritage Financial Strategies we help our clients reach their financial goals. Call 480-397-1184 to get started today!