Be Prepared to Claim Social Security Early — Even If You Don’t Want To

Things don’t always go according to plan.

You can sign up to start collecting Social Security once you turn 62. But if you don’t want to see your monthly benefits reduced, you’ll need to hold off on claiming them until full retirement age (FRA). FRA hinges on your year of birth. It’s either 66, 67, or somewhere in between. And for each month you take benefits ahead of FRA, they’re reduced on a permanent basis. You may have every intention of waiting until FRA to claim Social Security. But don’t assume that’s an option you’ll be able to exercise.

When you’re forced to claim benefits early

You may be planning to work well into your mid-to-late 60s in order to avoid claiming Social Security until FRA. But that assumes you’ll be able to hold down a job until then. And you may not be able to for different reasons. For one thing, your health might take a turn for the worse. And if it compromises your ability to do your job, you may have to stop working. Even if your health holds steady, the health of your spouse might decline. And if that happens, you may have to quit your job before FRA to become a full-time caregiver. Then there’s job loss to consider. Even if you’re great at what you do, if your company is forced to make cuts, your job could end up on the chopping block. And if you lose the job you’ve held for years, you might struggle to find another one. Unfortunately, many older job seekers fall victim to ageism. It’s very much illegal to not hire someone simply because they’re older. But it’s also hard to prove that a company is withholding a job offer due to age. A company can easily claim that you don’t have the skills for the job at hand, or that there’s a more qualified candidate than you. So all told, you might have to leave the workforce early, even if you’re willing and able to work.

Have a backup plan

It’s a good thing to plan to claim Social Security at FRA or beyond to avoid a reduced benefit. But it’s also smart to have a backup plan in case you’re not able to do that. One option, of course, is to ramp up your retirement savings rate. Let’s say you’re currently putting 6% of your earnings into an IRA or 401(k) plan. If you can save 7% next year, 8% the year after that, and so forth, you won’t necessarily have to make drastic lifestyle changes — but you’ll also be doing your part to amass a solid nest egg. Another backup plan might be to downsize your home if you’re forced to claim Social Security earlier than you want to. Downsizing might lower your housing costs in retirement, making it easier to get by with a smaller benefit. And if you walk away with a lot of money in the process by selling a larger home, you can then invest those funds and treat it as a second nest egg of sorts. All told, it’s a good thing to plan to claim Social Security at FRA or beyond. Just don’t be shocked if that plan doesn’t quite work out as expected.