Offbeat 3 awful reasons to take Social Security benefits at 65

15:21  06 june  2018
15:21  06 june  2018 Source:   fool.com

4 ways retirees botch their Social Security benefits

  4 ways retirees botch their Social Security benefits Social Security is a major component of retirement income, yet misconceptions about this federal program persist. Don't make these mistakes.Though Social Security replaces up to 40 percent of preretirement income for average earners, misconceptions about how the program works continue to persist.

Plenty of people have good reasons to start at the earliest age, but there are some awful reasons , too. Second, most people who live to age 65 will make it past 80, and by taking Social Security at 62, your monthly benefit -- and the total money you will get from the system -- will actually end up

While just 26% of workers plan to retire before the age of 64, close to three quarters of current retirees quit before their 65 th birthdays. 3 . Because you need the money right now. Financial necessity is another awful reason to claim Social Security benefits at 62; especially as claiming early means

Senior couple in a kitchen© GETTY IMAGES Senior couple in a kitchen If you're not familiar with how Social Security works, you might assume that there's a single age at which eligible recipients have to file for benefits. Not so. You actually get an eight-year window to claim benefits that begins at age 62 and carries through until age 70. (Technically, you're not required to file for benefits at 70, but there's no financial incentive not to.) Smack in the middle of that window is 65, an age often associated with retirement. But here are a few bad reasons to take benefits at that point.

1. You think it's your full retirement age

Your full retirement age is the age at which you're eligible to claim your full monthly Social Security benefit based on your earnings history. And while that age used to be 65, as life expectancies have increased, older workers have been forced to wait on collecting their benefits in full.

Will Social Security be standing by the time you can take it?

  Will Social Security be standing by the time you can take it? Is Social Security actually on the verge of going bankrupt? Or is that just a glaring myth?Social Security's shaky path

Consider some of the awful reasons given for planning to wait until 70 You can file for Medicare at age 65 . If you're already receiving Social Security benefits at this age, your enrollment is automatic; but that's not the case if you haven't enrolled.

As many as 65 % of beneficiaries rely on Social Security to provide the majority of their retirement income, and it's the only source of income for almost 25% of Americans 65 and older. While you can take Social Security as early as 62, doing so results in a reduction in benefits .

Currently, full retirement age for folks born between 1943 and 1954 is 66. Those born in 1960 or later have a full retirement age of 67, and for those born between 1955 and 1959, full retirement age is 66 and a certain number of months. Therefore, to take benefits at 65 would mean reducing them on a monthly basis.

What sort of reduction are we talking about? It depends on your full retirement age, but you'll lose roughly 6.67% of your full monthly benefit for each year you file early. Therefore, if you're looking at a full retirement age of 67 but claim benefits at 65, you'll slash your payments by 13.34%. The average current monthly benefit is roughly $1,400, so if that's what you're eligible for at a full retirement age of 67, but you file at 65 instead, you'll get a little over $1,200 rather than $1,400.

Why do so many people claim Social Security at 62?

  Why do so many people claim Social Security at 62? There are several reasons seniors take benefits so early. Here are a few common ones.Though your Social Security benefits themselves are calculated based on your earnings history (specifically, your top 35 working years), the age at which you file for those benefits could cause your monthly payments to change. To collect your full monthly benefit, you'll need to wait until full retirement age (FRA) to file for Social Security, and that age is not 62. For today's workers, it's either 66, 67, or 66 and a certain number of months. Therefore, if you file at 62, you'll reduce your benefits by a hefty percentage, the specifics of which will depend on your exact FRA.

If you qualify for Social Security retirement benefits -- and it's hard not to qualify, as it It began at age 65 for everyone and was increased in 1983 to 67. That partly reflects longer Below are three poor reasons to do so. Awful reason No. 1: To receive fatter checks because you need the money.

Now at first glance, 62 might seem like the most ideal age to take benefits , since it means getting your hands on them as soon as possible. But while there are a few valid reasons to claim Social Security at 62, going this route can also backfire.

2. You think you're required to sign up for Medicare and Social Security simultaneously

Many people tend to associate Social Security with Medicare, and while the two programs are interrelated, they're subject to different rules. One key distinction is that Medicare eligibility begins at age 65, and you're not only allowed, but encouraged, to sign up for Medicare up to three months before the month of your 65th birthday to get the ball rolling. But don't confuse Medicare eligibility with that of Social Security. Convenient as it might seem to file for both simultaneously, by going that route, you'll reduce your Social Security benefits.

Incidentally, though you're allowed to file for Social Security as early as age 62, Medicare has a firm eligibility age of 65 unless you happen to qualify for a rare exception. Therefore, you should generally plan on enrolling in the two programs separately unless there's a compelling reason to claim Social Security at 65.

Concerned about Social Security cuts? Here's a bigger worry

  Concerned about Social Security cuts? Here's a bigger worry The problem goes well beyond a potential reduction in benefits.But troubling as that news might be, an even greater concern is that 34% of current recipients rely on Social Security to provide 90% to 100% of their income. And the fact that nearly half of households have no retirement savings means that millions of Americans will come to depend on those benefits just as heavily. And that's a mistake that could ruin them in retirement, even if benefits don't get cut at all.

The Social Security Administration considers the "full retirement age" to be 66. However, you can actually claim your benefits as early as age 62 or as late as age 70. People delay claiming benefits because their monthly checks get bigger for every year they wait.

It used to be 65 for everyone, but to strengthen the Social Security system, the age was later increased. Good reasons to take Social Security benefits at 70.

3. You're afraid Social Security will run out of money if you wait

One reason many Americans file for Social Security ahead of full retirement age is that they're worried the program is going broke and want to get their hands on their money while they still can. So, let's dispel that rumor, because it's pretty baseless. While it's true that the program is facing some financial challenges, and that it may have to cut benefits in the future if Congress doesn't jump in with a fix, there's no reason to believe Social Security is going away. The program has the ability to sustain benefits at their current level until 2034, which leaves lawmakers more than a decade and a half to address its future shortfall. Therefore, you shouldn't rush to file for benefits at 65 because you're afraid to wait any longer.

Of course, there are some situations where filing for Social Security at 65 isn't such a bad idea. If you find yourself out of work at that point in life, for example, it's better to take benefits than rack up credit card debt to pay your living expenses. But if you're filing at 65 for any of the above reasons, you're doing yourself a disservice that could come back to bite you in retirement.

Claiming Social Security early could lead to poverty later in life

  Claiming Social Security early could lead to poverty later in life Think hard before collecting Social Security early. You may end up regretting it.Since the law changed in 1961 to allow Americans to claim Social Security benefits at age 62, the average age of claiming benefits has dropped 1.4 years. Total Social Security income for those at the bottom of the income distribution dropped as well, according to a recent report circulated by the National Bureau of Economic Research. This also dovetailed with an increase in elderly poverty and income inequality.

Plenty of people have good reasons to start at the earliest age, but there are some awful reasons , too. Second, most people who live to age 65 will make it past 80, and by taking Social Security at 62, your monthly benefit -- and the total money you will get from the system -- will actually end up

Though you might want your money as soon as possible, filing for Social Security at 62 could end up hurting you -- and your family.

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3 Social Security moves you should never make .
Don't leave money on the table.Social Security has some complicated provisions, and in many cases, there isn't a clear-cut answer about which is the absolute best strategy to follow. But there are a few situations where there's a very definite wrong answer in all circumstances. The following three moves never make sense and they always result in leaving money on the table in retirement.

Source: http://us.pressfrom.com/news/offbeat/-152188-3-awful-reasons-to-take-social-security-benefits-at-65/

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