Personal Finance

The 5 Most Common Reasons Americans Filed for Social Security When They Did

Ian Cooper

Published: October 24, 2024 10:22 am

Last Updated: October 24, 2024 12:03 pm

Experts say it’s better to wait to claim your Social Security benefits.

And while it’s true, we all have different financial needs.

Sure, you can always delay retirement, which will increase your benefits. Eligibility for retirement benefits does start at the age of 62. But if you wait until your full retirement age, you’ll receive 100% of your earned benefits. Better, for every year you wait beyond full retirement up to 70 years of age, you can receive another 8% boost to your benefits.

If you take it early, there are penalties.

But again, we all have different financial needs, which will impact when we claim benefits.

“For those who are planning to draw Social Security in the future, nearly 4 in 10 expect to draw it at an age specified in their overall retirement income plan, while another 3 in 10 will draw it at an unplanned age due to life events,” says the Social Security Administration.

Key Points About This Article:

• Taking Social Security at age 62 can make sense for some, but it’ll reduce your payout.
• If you’re facing financial emergencies, you could benefit from accessing benefits early.
• It’s estimated that about a third of Americans want to claim Social Security early at the age of 62 while still maintaining employment.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

Some of the top reasons for doing so, according to Nationwide Financial include:

No. 1 – Taking early retirement is part of an overall retirement income plan.

For many Americans, taking early retirement is part of an established income plan.

According to the SSA, “In the case of early retirement, a benefit is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.”

No. 2 – Americans need the money.

Again, millions of us have different financial issues.

As noted by USA Today, “Americans who tap retirement money to cover an urgent expense often act out of desperation, investment experts say. They may lack emergency savings and live on too tight a budget to risk taking out a loan.”

For many Americans, budgets have been under pressure with soaring prices. Cash is tight. And tapping Social Security to make ends meet makes sense. Also, according to the National Council on Aging, “80% of households with older adults—or 47 million of such households—are financially struggling today or are at risk of falling into economic insecurity as they age.”

No. 3 – Health Problems

If you’re in poor health, you may fear you may not reach full retirement and decide to take your benefits early. Unfortunately, millions are dealing with issues such as chronic diseases, the potential for falls, oral health issues, and even mental health issues. All of which can severely impact your quality of life and demand that you tap social security earlier.

No. 4 – Job Loss

Job losses can happen at the worst times. If it happens, it’s another reason to potentially consider tapping your Social Security benefits earlier. With the economy always in flux, it’s important to look into financial planning with an advisor. With the right plan in place, your finances can survive economic hardship and job loss.

No. 5—Many don’t believe Social Security will be around later.

At the moment, 75% of adults aged 50+ are concerned that Social Security will run out of funds in their lifetime, according to Nationwide Retirement. That’s up from 66% in 2014.

However, according to the Social Security Administration, benefits are expected to be paid in full and on a timely basis through 2037. After that, the SSA says taxes are expected to be enough to pay 76% of scheduled benefits unless Congress makes changes to benefits and revenue sources.

The last time Social Security was in a deficit was in 1983. To fix the issue, the government increased the full retirement age to 67 from 65 and also charged income tax on benefits.