8 GOOD REASONS to File for Social Security at Age 62

Summary

This video discusses the strategy of claiming Social Security benefits, offering eight reasons to file early at age 62 and eight to defer until age 70. It uses Jack and Jane's example to illustrate the financial impact of claiming early versus deferring, highlighting the break-even point at age 79 and the significant difference in total benefits by age 85 and 95. The video also touches on the importance of considering longevity, health, and other financial sources when making the decision.

Takeaways

• 📊 Claiming Social Security at age 62 versus age 70 creates a significant difference in total benefits, with the break-even point at age 79.
• 💸 Deferring Social Security until age 70 results in larger payments, with a potential additional $240,000 by age 85 and $740,000 by age 95.
• 👨‍👩‍👧‍👦 Spousal and dependent benefits can be claimed once the primary earner starts Social Security, making it a reason to file early for some families.
• ⏳ Starting Social Security early (at age 62) makes sense for those with a shorter life expectancy or those in poor health.
• 💰 For individuals with significant retirement savings, starting Social Security early allows other assets more time to grow.
• 🛑 Avoid filing early if you're still working and your income exceeds the earnings limit, as this can result in a reduction of benefits.
• 🏡 Social Security may be the main or only source of income for some, making deferring the best option to maximize lifetime benefits.
• 📉 Filing at age 62 results in a permanent 30% reduction in benefits compared to full retirement age.
• 👴 People often underestimate their longevity, and the centenarian population is expected to quadruple, impacting long-term benefit decisions.
• 💡 Social Security decisions should be coordinated with overall tax and retirement planning to maximize financial outcomes.

Q & A

What is the primary insurance amount (PIA) and how does it relate to full retirement age?

The primary insurance amount (PIA) is the dollar amount one would receive at their full retirement age, which is 67 in the example of Jack. It's the base amount used to calculate social security benefits.

What is the spousal benefit in the context of social security, and how is it calculated?

The spousal benefit is a type of social security benefit that a spouse can receive based on their partner's earnings record. In the example, Jane receives 50% of Jack's PIA as her spousal benefit since she doesn't qualify for her own benefits.

Why might the break-even point for social security benefits be at age 79 for some individuals?

The break-even point at age 79 means that by this age, the total cumulative benefits received by individuals who started receiving benefits at 62 are equal to those who deferred receiving benefits until age 70. The higher monthly benefits for those who deferred compensate for the later start.

How does deferring social security benefits until age 70 impact the total cumulative benefits by age 85?

Deferring social security benefits until age 70 results in a significantly higher total cumulative benefit by age 85. In the example, the total is $1,284,000 compared to $1,144,000 for those who started receiving benefits at 62, showing an additional $240,000.

What is the projected increase in the centenarian population over the next 30 years, and why is this significant?

The centenarian population, those aged 100 or older, is projected to quadruple over the next 30 years, growing from about a million to four million. This signifies an aging population and underscores the importance of considering longevity when planning for social security benefits.

Why might someone's life expectancy be higher than the national average after reaching their 60s?

If someone has already reached their 60s, their life expectancy is typically higher than the national average, which starts at birth. For a 65-year-old female, the average life expectancy is 86, and for a 65-year-old male, it's 85. This is important for planning social security benefits.

What are some reasons one might consider filing for social security benefits early?

Reasons to file early include needing dependent benefits, being single with a shorter life expectancy, having a spouse with a shorter life expectancy, being ready to retire with a sizable nest egg, not working and having no earned income, having a future source of lifetime income, wanting to enjoy income while younger, or needing the money due to physical limitations.

What are the eight good reasons provided in the script for deferring social security benefits?

Reasons to defer include having higher late-career earnings that can increase benefits, expecting to live beyond age 80, wanting to avoid a 30% permanent reduction in benefits, considering health insurance costs, fearing Social Security insolvency, being subject to earnings limits while working, relying on Social Security as the main retirement income, and tax planning.

How can someone get a professional social security analysis and strategy report?

A professional social security analysis and strategy report, which is customized with personal numbers and strategies, can be obtained through the speaker's firm by visiting socialsecuritylane.com.

What is the potential impact of health insurance costs on the decision to retire early or defer social security benefits?

Health insurance costs can be a significant factor in retirement planning. High premiums for private health insurance can make it financially prudent to delay retirement and social security benefit claims until reaching age 65 or having employer-provided health insurance.