Suze Orman: Claiming Social Security Early Only Makes Sense in 2 Circumstances
You can start receiving your Social Security retirement benefits as early as age 62, but personal finance expert Suze Orman says that's usually the wrong move.
In a recent blog post on the Orman website, she wrote that most people should delay claiming Social Security for as long as possible, because waiting can increase their monthly benefits for the rest of their lives. That doesn’t mean you can’t claim early, but she believes doing so only makes sense in two scenarios.
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You Genuinely Need the Income To Cover Living Expenses
Not everyone has the financial flexibility to wait, and Orman understands that. If you have no money saved up and you need Social Security to help pay for necessities like housing, food or healthcare, claiming benefits early may be your only realistic option.
That said, she believes you shouldn't claim early simply because you're worried benefits will disappear. The program is experiencing funding challenges, per Rutgers, but it has faced similar problems before, including in the early 1980s, when lawmakers stepped in with reforms rather than forcing beneficiaries to bear the full cost. In other words, she thinks fear isn't a good reason to claim benefits early.
If you have enough savings or other retirement accounts to live off of for a few years, delaying Social Security could result in a much larger guaranteed monthly check for the rest of your life.
You Have a Serious Health Condition or Expect a Much Shorter Lifespan
The second exception is if you have a medical condition that may shorten your life expectancy. In that situation, it can make financial sense to claim early since you’ll receive more lifetime payments than if you waited until full retirement age or age 70.
If you're thinking about claiming early because of health concerns, discuss the decision with both your healthcare provider and a financial planner to better understand how your expected longevity could affect your lifetime benefits.
Why Waiting Can Pay Off
If neither of those applies to you, Orman believes you’ll likely be much better off delaying when you start your Social Security benefit. She explains that for every year you delay between your full retirement age and age 70, your benefit increases by 8%. In other words, if you wait three years to claim at 70, your benefit is 24% larger than at 67.
If you're wondering how much of a difference waiting can make, the Social Security Administration provides a chart that clearly shows you how much your benefits can increase each year you delay claiming.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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