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Social Security - Filing Early

Despite the growing awareness about the value of delaying the collection of benefits for as long as possible — about 50% of retirees still claim retirement benefits as early as possible - at age 62. Now, of course, some people may not have a pension or retirement plan to rely on, and have no choice but file for early benefits. But for many individuals, the decision to take benefits early or even delay them beyond their retirement age is an important one that requires careful planning to identify optimal solutions.

The disadvantages of filing early are:

  • Your retirement benefits will be permanently reduced. Any future increase in your benefits will be either the result of the cost of living adjustments or a switch to a higher spousal or survivor benefit. 
  • If you continue or go back to work while you file early and before you reach your full retirement age, you may be subject to an earnings cap penalty if you make too much money.
  • If you are married and claim benefits early, the survivor benefit available to your surviving spouse is also permanently reduced.
  • If you were born on or before January 1, 1954, you may still qualify to file restricted spousal benefits, but you lose that privilege if you file before your full retirement age.

Since no other person can receive benefits on your work record unless you are receiving benefits, there may be times when early filing makes sense if the triggering of "auxiliary" benefits to spouses and dependents provides solutions to your financial decisions.

Another thing to be cautious of when you decide to receive benefits early is the potential earnings cap penalty for working before you reach your full retirement age. So if you begin collecting before you reach age 66, and then continue or go back to work, not only will your benefits be reduced because you filed early, but you may be subject to an earnings penalty that will reduce your benefits even further. However, once you reach your FRA, you can work as much as you want without being penalized.

So the decision to take early benefits can have an impact on overall income, taxes, cash flow, and survivor protection. At Carr Wealth Management, LLC, we specialize in identifying the optimal claiming strategy tailored to each client’s needs. Please contact us to schedule a no-charge consultation or if you simply have a question about Social Security Benefits or other related planning areas.

 Click Here for Examples on Early Filing

 Click Here for Main Social Security page.

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