Coronavirus and Social Security: Should you consider collecting benefits early?
About 33 million Americans have filed for unemployment since mid-March
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The coronavirus pandemic is wreaking havoc on Americans’ financial situations, which may cause some older Americans to consider collecting Social Security benefits before they had planned to.
About 33 million Americans have filed for unemployment since mid-March. Considering one-third of the U.S. labor force is 50 or older, some older Americans may be forced out of the labor force years earlier than they had anticipated.
Social Security is a tool that is available to people who have worked for a sufficient number of years: For most Americans who haven’t started collecting, the full retirement age will either be between ages 66 and 67. Age 62 is the earliest you can begin collecting, while 70 is the latest.
While delaying when you collect, if possible, can actually increase your benefit by as much as 32 percent, some reasons that people may need to file early include paying for health care or paying for other immediate living expenses, particularly in light of job loss.
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Chad Parks, founder and CEO of Ubiquity Retirement + Savings, told FOX Business that given the circumstances, collecting benefits early could be “the right move,” even for people who were planning to wait until age 67 or 68.
“It’s a very personal decision,” Parks added.
Taylor Hammons, head of retirement plans at Kestra Financial, told FOX Business that opting to take Social Security early needs to be part of a broader conversation about budget, expenses and income.
“Those checks will be reduced,” Hammons said. “For some individuals that may be the best decision for them … it goes back to holistic financial planning."
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For people whose full retirement age is 66, the reduction of benefits for those who claim at 62 is 25 percent, 20 percent for those that claim at 63, 13.3 percent at age 64 and 6.7 percent at 65.
Parks said it is worth noting that – at its current pace – Social Security will only be able to pay benefits in full through 2035. After that, only 79 percent of scheduled benefits will be covered.
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If you recently filed but think you made a mistake, you are able to reverse that decision within 12 months. In order to do that, you pay all the money back in a lump sum, suspend your account and it will continue to grow until you are ready to file for benefits in the future.
When in doubt about your financial plans, consulting a professional has proven to help. Those who worked with an expert saw 15 percent greater lifetime income benefits – $1,551 per month versus $1,324.