Social Security is an important source of income for millions of retirees. Chances are, it will also play a big role in your retirement finances. It’s important to claim at the right time because your filing age will determine how much monthly income you’ll receive from the program.
You are entitled to a full monthly allowance based on your income history full retirement age, or FRA. If you file under FRA, you will receive reduced benefits.
Meanwhile, 62 is the earliest age you can sign up Social security, and it’s no wonder it’s popular with seniors. But so far there are plenty of them good reasons to file for Social Security at age 62, here are three reasons why it might not be the best path for you.
1. You will reduce your monthly allowance for life
It’s a big myth that if you file a Social Security claim before the FRA, your benefits will be temporarily reduced, but then they will be restored to their full amount once you reach the FRA. If you file for Social Security at age 62, you will receive a monthly benefit that will be 25-30% lower than the FRA. But this reduction will remain in place permanently, leaving you with less monthly retirement income to look forward to.
You can now technically cancel an early Social Security claim and get a higher benefit — but only if you do so within 12 months of filing and pay back all the money you received. Because the latter may not be possible, it’s often the case that those who claim Social Security at age 62 reduce their benefits for the rest of their lives.
2. You may be inspired to retire early
If you sign up for Social Security at age 62, you may be tempted to leave the workforce at that point and try to live on benefits. But retiring at 62 has consequences. On the one hand, it could mean giving up a few extra years of savings, thereby limiting you in this regard. But it can also mean you have to struggle to pay for your health insurance — or skimp on insurance and hurt your health.
Although you can sign up for Social Security starting at age 62, you can’t sign up for Medicare until a few months after your 65th birthday, and Medicare coverage itself doesn’t kick in until you under 65 years of age. for Social Security at 62 inspires early retirement, it can be a bad move for both your health and your money.
3. You may deplete your nest egg prematurely
If you sign up for Social Security at age 62 and reduce your monthly benefit, it could mean you have to take more money out of your An IRA or 401(k) plan. every month. And this can lead to a scenario where you risk depleting your savings over the course of your lifetime, rather than maintaining them throughout your retirement.
Be careful when filing early
Applying for Social Security at age 62 isn’t automatically a bad idea. But it is important to realize the negative consequences of this before making a decision.
The $18,984 Social Security bonus is completely ignored by most retirees
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” can help ensure your retirement income increases. For example: One simple trick can pay you $18,984 more…every year! Once you learn how to maximize your Social Security benefits, we believe you can confidently retire with the peace of mind we all seek. Just click here to find out how to learn more about these strategies.
The Spotted Fool has a disclosure policy.