5 GOOD REASONS to File for Social Security at Age 62

in this video i am going to give you five good reasons why you may want to consider claiming your social security benefits at the earliest age possible of 62. we will discuss the break-even point and i will give you five good reasons why you may not want to claim at age 62. [Music] welcome to the financial fast lane my name is lane martinson today i'm going to give you five good reasons why you may want to claim your social security benefits early and i will also give you five good reasons why you may not want to do that and so before i do um it's important that we kind of cover some basic concepts make sure we understand how social security works and i'm going to do a comparison using kind of a sample couple we have john and linda john's full retirement benefit his pia is 2442. i'm going to use in this example his wife linda is going to be receiving the spousal benefit which is 50 of john's benefit 1 221 and i'm going to assume a 3 cola in all years okay now you want to know that everyone has a crossover point regarding whether you claim early or you claim late or somewhere in between but in this example we're looking at claiming early and and delaying all the way to age 70 just as a comparison okay now in this example as you look at this chart you can see that their crossover point is is 79 and eight months um 79 in two months for her and so it's typically going to be around age 79 to 81. that is really the range i know a lot of times people think that the crossover point is much longer but it's not um age 80 is really kind of um where most people are going to reach their crossover point between claiming early or claiming late now a really important concept to talk about here is life expectancy because how long you live is a very big factor as far as the strategy that you might want to use right now what you don't want to use is the national average the national average life expectancy in the united states is 17 age 79. it's in the united kingdom it's 81 in canada it's age 82. but there's a problem with average life expectancy because it takes into account all of the you know infant deaths from birth um opioid overdoses fatalities and so forth all the bad things that can happen to you throughout a lifetime are included in that national average but if you have already made it into your 60s and you're in generally good health then your life expectancy is not the national average for a female age 65 her average life expectancy is age 86 for a man it's age 85. now those are the averages and so that means 50 of us will live beyond those ages right this is uh my dad and i this photo was taken he was 92 at the time he actually passed away recently at age 94. he was actually just short of his 94th birthday and he had a very long and independent life but the truth is just a generation before if he had been born a generation before he would not have lived anywhere near that long 30 years ago my dad had open heart and it preserved his life and he had a very long independent life and so we really do live longer nowadays the fastest growing segment of the u.s population is people age 85 and older let me think about that that is the fastest growing segment of our population it is projected in in 28 years from now that there will be a million americans that are age 100 or more so we definitely have an aging population so you want to be sure to consider life expectancy when making a decision okay so now let's do a comparison here okay so this is this is showing a side-by-side comparison starting at age 62 all the way to age 85 okay and so the pink column represents if you if they claim their social security benefits at age 62 and then the purple column is if they claim their benefits at age 70. at age 70 you'll see that their payments are going to be much larger right because they had earned the delayed credits but at age 62 while their payments are less they have many more years of payments right and so by the time between age 62 and 69 if we look at how much they have received in total at that point it's a quarter of a million dollars right 249 000 that they had received before they reached age 70. so that is a lot of money to be cons to take into consideration right so now if we if this couple was to claim at 70 they didn't have that income but they now have these larger payments and their break even is at age 79 just right about almost age 80. and so from that point on they're going to have more money so let's look at this chart so if if this couple has a short life and a short life is defined by age 75 so if you were to die at a 75 and you compare the total cumulative you're going to have more money if you claim early at 62 right and so claiming at 62 would be the best option in that case then the full retirement age is kind of showing the middle of the road and then um age 70 would be the worst option if you're planning to to die at age 75 and now if you have a normal life expectancy normal life is considered age 85 then you can see that claiming 62 you're leaving a good amount of money on the table and then if you have a long life this is assuming age 95 there's a really big difference in the total cumulative benefits so as we look at this chart side by side if you were to claim at age 70 and you live to age 85 then you would have a total cumulative additional amount of 229 000 compared to if you were to claim earlier right and then if you lived to 95 it's a huge difference right 703 000 more by delaying the time that you started social security but now i'm going to give you five good reasons why you may want to claim your social security benefits early number one you want to preserve your retirement investments and to allow them to grow better over time so this is a real viable option so if you're retiring and it may not be 62 but sometime before 70 right if you have an investment account and you're now need to pull for you need income and you start taking withdrawals from your savings or from your retirement accounts that money now is going to be used and it cannot be it's no longer able to grow over time and so you start to deplete your assets so starting social security can allow you to preserve more of those retirement assets and so it can make it's a whole additional component that will apply to some people and not to others and so there are times when it really does make sense to claim early because you want your investments to grow and continue to grow and so looking at this crossover point chart again if you claim a 62 and your crossover point is age 80 that means in between all those years from 62 to 80 you will have more money from social security it's only after that it starts to drop right it's in the it's in those later years so number two you have a source of guaranteed lifetime income that you cannot outlive such as a pension or an annuity and so again the reason why you might delay is if you have some concern about those later years and wanting to make sure that you have money to cover you in your 80 plus age range but if you've already mitigated longevity risk with an annuity or or you have a pension that has a lifetime income on top of your social security and then you may you know those later years may be fully taken care of and you really don't have as much concern that can be a reason why you might want to go ahead and claim social security benefits as well okay number three is based on your health you know if you simply do not expect to live to break even that would be a very compelling reason to go ahead and claim early number four you'll be switching from your benefit to a higher spousal benefit when your spouse files so that's going to apply to some people where they have their own benefit but it's smaller than the spousal benefit and so one benefit one spouse could claim their benefit for a number of years and then switch to the to the larger spousal benefit number five for whatever reason you are not able to work past 62 and you simply need the money and so some many times that's the case and you just need to take the money and claim 62. so those five good reasons now i'm going to give you five good reasons why you may not want to claim early number one is you're still working and your income exceeds the earnings limit right so social security is intended for retirement and so if you retire what they consider early prior to your full retirement age then you are penalized based on your income so the earnings limit is nineteen thousand five hundred sixty dollars as as of 2022 so what that means is you can claim social security early you can continue to work and as long as your income doesn't surpass 19 560 there's no penalty or problem but if your income does surpass that then it's a stiff penalty it's 50 of everything above that threshold is going to be penalized and so it it really very rarely is it going to make sense to claim early if you are still working number two you are not able to adequately save for retirement and you will become heavily dependent on social security so if social security is going to be really your main source of income down the road that's a really compelling reason to not claim early try to work another year or two let social security get a little bit larger maybe work two or three more years where you can save up some additional money it can be a really smart strategy and it'll give you more social security down the road number three your benefit is likely to become the survivor's benefit for a younger and healthier spouse so you may have the the larger um social security benefit in a in a marriage couple where that person is maybe in poor health and they don't anticipate living until to break even and so claiming early maybe make a lot of sense for them but if the but if the surviving spouse is is going to inherit that benefit then that's a consideration so you may want to delay for the benefit that the surviving spouse can have a larger benefit number four you have a roth conversion plan over the next few years and you are trying to manage the taxes and you do don't want to increase the provisional income which will cause taxation on your social security benefits and as well as potential irma charges on medicare and so you have to be careful if you're doing roth conversions that may be a reason to defer social security and then number five is if you have longevity and you really expect to live a long life that is a compelling reason also to not claim early social security really is very complex and it's easy to make mistakes you want to get this right there's a lot of money at stake and it really is going to vary a lot depending upon your situation every person is unique and there's a lot of things to to be considered now we have a professional social security analysis report that's available through my firm very comprehensive personalized reports gonna show you all the your specific strategies and best options you can access that by going to socialsecuritylane.com for more information it's a nominal fee but i think you'll find it very well worth it so i hope you found value in this video if you did i hope you'll share it with others please give us thumbs up and i look forward to seeing you in the next episode of the financial fast lane [Music] you

Channel: Financial Fast Lane

Views: 2,471,703

Keywords: social security at 62, social security explained, social security benefits, social security, social security benefits at 62, social security benefits at age 62, best age to file for social security, social security retirement benefits explained, early retirement, social security benefits explained, social security update, social security explained for dummies, how much social security will i get at age 62, five reasons to retire and take social security at age 62

Id: 4Gpzw5wcFo4

Length: 15min 46sec (946 seconds)

Published: Fri Jul 29 2022