When it Makes Sense to Take Social Security Early

In the past, we’ve discussed how beneficial it can be to delay receiving Social Security benefits as long as you can.  You can see this discussion in the article Ah, Sweet Procrastination – it makes good financial sense to delay receiving your benefit to age 70 in many cases, but of course not all.

The reason this is such a great benefit is that this government-backed income stream is pretty much as good as you can get, in terms of longevity insurance.  When you start receiving the benefit, you’ll continue to receive it through your entire life – at least under current law, which is doubtful to change that fact.  The reason that you should delay receiving your benefit as long as possible is due to the fact that when you start receiving your benefit impacts the amount that you will receive for your life – plus, depending upon the amount of your spouse’s benefit, it will impact the amount that your spouse would receive as a Survivor’s Benefit as well.

But there are times when it may make more sense to begin receiving your benefit earlier…

Starting Early

Circumstances require it. If you’re in ill health, have a shortened life expectancy, or have very limited other resources, it may be necessary to start taking your Social Security benefit early.  The financial calculations that we do that explain how delaying receipt of benefits is the better choice always assume that the recipient will live to at least age 80 or beyond, and can get along using other resources until age 70.  If one or the other (or both) of these circumstances is not the case for you, it likely makes more sense to begin taking your benefit earlier.

Spouse with a relatively small benefit. If the spouse with the lower wage base has earned a relatively small benefit and intends to switch over to a Spousal Benefit as soon as it makes financial sense (may require a File and Suspend by the other spouse), it might make more sense to start taking the smaller benefit early, even though it is reduced.  In this case the financial impact of starting to take the benefit early doesn’t amount to a significant reduction in real dollars, so taking the benefit for several years is just extra “gravy on your french fries”, in a manner of speaking.

Social Security doesn’t matter to you. If you have more funds than you really need and the Social Security benefit is of very little real benefit to you – plus if you consider the Social Security system a “safety net” for needy folks, you might want to start early.  Or you may choose to not take the benefit at all.

Psychological impact. If you simply cannot stand the thought of leaving your Social Security benefit in the government’s hands any longer than necessary – and you feel it’s to your best interest to start early (even in the face of facts to the contrary), then by all means start early.  If that’s what it takes to ease your mind, you should do it – life’s too short to be wrought up over such matters.

Closing Thoughts

As stated before, in most cases it makes the most financial sense for the spouse with the higher earned benefit to delay benefits to age 70, but not in all cases.  In order to really get a good handle on how these calculations would work for you, it may help to hire a professional advisor to run through the numbers with you.

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 Jim Blankenship, CFP®, EA, is an expert in personal retirement, IRAs, and tax issues, with more than 25 years of experience in the industry. Read more from this author