We’re talking about the age when most people file for Social Security benefits. There’s one age that’s the most popular BY FAR. I’ll tell you what that is and give you 5 reasons when I think filing at this age makes sense.
The Most Popular Age
If we look at the data from the Social Security Administration, it doesn’t take long to see that there is ONE AGE that’s the most popular to file for Social Security. That’s what I want to talk about, but the other filing ages are also interesting.
For example, 4.2 percent don’t file until they are 70 or older. That just doesn’t make a lot of sense unless they were either incarcerated or still working in an attempt to qualify for a benefit.
So before we move on to the other ages, please understand…you cannot increase your benefits by delaying beyond 70. Once you’ve reached that age, your benefit will stop growing except for the cost of living adjustment and a possible recalculation if you continue to work.
As we move on and look at the other ages…there are nearly 9 percent that file between 67 & 69, 15.45 percent that file at 66 (that’s likely because that’s the full retirement age for individuals who are 66 right now), there’s right at 10% that file at 65 and about the same percentage that file at 63 & 64. So obviously this doesn’t leave much of a secret what the most popular age is.
Nearly a third file for benefits at the earliest age possible…62. Now I’m not a staunch opponent of filing at 62. I think there are times when it makes sense.
5 Reasons Why Filing At 62 Makes Sense (For Most People)
There are five times I think it makes sense to file at 62. However, it doesn’t always make sense for everyone.
So I’ve never been a big believer in the broad rules of thumb when it comes to filing for social security. There are just too many factors. However, it is true that in most cases it makes the most sense to delay filing for social security until at least your full retirement age. But here’s 5 times when I think it makes sense to file as early as possible.
Reason 1: Income
Number one…if you need the income. Sometimes there is no strategy. You’re no longer working and you need income. The employee benefit research institute found that nearly half of all workers leave their job before they planned to retire.
When you dig into the numbers, 55% was from a disability, 24% was from downsizing and 17% was so that the worker could care for a sick spouse. One thing to mention here before we move to the next point…if you left work early due to a disability, you should apply for SSDI. Instead of having your benefit reduced for early filing, youll receive 100% of your FRA benefit.
Reason 2: Single with Health Issues
Number two…you are single and have health issues. We talk a lot about strategy for married couples. If you are single, you really only have your own income needs and life expectancy to consider. This is one of the few times where I recommend using a break-even analysis. This will tell you the age at which you would have to live until to receive the same benefits for a later filing age.
Reason 3: Spousal Issues
Number three…spousal issues. There are two separate spousal issues that have to be discussed.
The first is if your spouse is the higher earner and has health concerns which will shorten their life expectancy. Since their earnings were higher, their SS benefits will likely be higher. If they pass away early, your lower benefit will drop off and you’ll begin to receive their higher benefit. So, if you delay for several years to increase your own benefit and eventually get SS from a spouse, it wouldn’t have been worth it.
The next spousal issue is that if your spouse is the lower earner and older than you. If your spouses earnings were so low that a spousal benefit from your record will be the highest benefit they will receive, keep in mind that they cannot receive that benefit until you file for your own benefit. This means that by filing early, you will receive a reduced benefit, but your spouse will become entitled to a benefit as well. The reason we include this is that once your spouse reacher his/her FRA, their spousal benefit will not increase. So if they are older than you, this could make sense in certain conditions.
Reason 4: If You Have A Survivors’ Benefit
Number four…if you have a survivors benefit.
A few years ago there were a few filing strategies that were closed for almost everyone, EXCEPT SURVIVING SPOUSES. Let’s walk through an example and see how this works. Assuming your own benefit at a FRA of 67 is $1,500 and your survivors’ benefit is $1,750, we know that the reduced amounts at age 62 are $1,050 for your own and $1,394 for your survivors’ benefit. Since the survivors’ benefit still allows switching back and forth, you could file for your survivors’ benefit at 62 (or even 60) and switch back to your own benefit at 70 at which point it would’ve grown to $1,860.
When it makes sense, a variation of this can also be done in reverse. If you want to know more about this, check out the video I did on the survivors benefit filing strategy.
Reason 5: If You Have Minor Or Disabled Children At Home
Number five…the last one…is if you have minor or disabled children at home. If so, they may qualify for a benefit when you file. So by delaying your filing, you are missing out on your own reduced benefit plus the benefit payable to your child.
There’s a video that I posted on Social Security Family Benefits. Just keep in mind with all of these strategies that if you file before your full retirement age, the earnings limit will apply. Once you pass your full retirement age, the earnings limit will no longer apply.
It’s your retirement!
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