| A recent Nationwide Retirement Institute survey of U.S. adults found that 42% of respondents plan on filing for Social Security benefits early while continuing to work.
To be clear: Claiming your benefits early does have some downsides.
First of all, you need to know that starting benefits early will lead to a smaller monthly Social Security check, and that means you may have to lean more heavily on your retirement investments.
As a result, you could end up outliving that money, leaving you with just your (now lower) Social Security payments.
In addition to receiving a smaller monthly benefit than if you'd waited until full retirement age, you'll get less on a dollar basis from any future Social Security cost-of-living adjustments.
If you delay claiming until after your full retirement age, you will receive an even bigger monthly benefit once you do claim. For every year you hold off past full retirement age, your benefit will grow by as much as 8%.
Additionally, you need to be aware that you'll be penalized if you continue to work.
To that point, before you reach full retirement age, any money you earn from a job can affect your Social Security benefits. In 2022, for example, Social Security will deduct $1 from your benefits for each $2 you earn above $19,560. You will get the money back later after you reach full retirement age, but in the meantime, you'll have that much less to spend.
To be fair, there are a number of reasons that someone might consider taking Social Security benefits before they reach full retirement age.
Some pundits say the advantage of taking retirement benefits early is that you start to collect the money that you've been paying over to the government monthly since you started working. (As I said, the downside to that, however, is that it causes a permanent reduction in your Social Security retirement benefit.)
Also, some people may just need the money earlier to cover everyday living expenses. Someone may just want the money now. Even if they don't need the benefits early to support themselves, the person may have other reasons for wanting to take them as soon as possible.
Some people, for example, are concerned that Social Security may be unable to meet all of its obligations in the future, so they might as well get theirs now. Others believe they could do better by collecting benefits and investing them, rather than leaving it in the government's hands.
As you can see, deciding the right age to claim Social Security retirement benefits is complicated. It all depends on personal factors, such as your financial situation, your health, your marital status and finding your "break-even point."
It's so important to do your research now and learn about the many options that are available before you decide when to start receiving Social Security benefits. It's all about making the most of your retirement money.
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