Should You Take Social Security Earlier Than Planned If You’re Laid Off Due To COVID-19?

Forbes ^ | April 15 2020 | Ashlea Ebeling

[rintintin]

If you’re laid off in the COVID-19 economy and you’re an older adult, you might be wondering: Am I going to have to take Social Security earlier than I planned? How much will that reduce my monthly benefits in the long run? What happens if I get a new job?

For many older adults, claiming Social Security early would be a big mistake — a mistake made by many older workers who lost jobs in the Great Recession.

“In 2008/2009, the jobs just were not there for older workers, and they had to claim Social Security early. The bad part about that is it locks you into a low monthly benefit,” says Alicia Munnell, director of the Center for Retirement Research at Boston College. In 2009, one year after the stock market plummeted, 42.4 percent of 62-year-olds signed up for their benefits, up sharply from the 37.6 percent of 62-year-olds who signed up in 2008, Center researchers found. (Sixty-two is the youngest age at which you can claim Social Security retirement benefits.)

If you do go down the road of taking Social Security early, keep in mind that you can start Social Security early and stop it later to mitigate the damage to your income stream. We’ll explain how. First, consider these options if you need cash.

[buckalfa]

Then again get some while some is still there!

[entropy12]

Yes if

(1) You need the money
(2) If you have dependents living with you younger than 18.
because you will get additional money for the minor.

[ActresponsiblyinVA]

Get it and invest it?

[A Navy Vet]

"Then again get some while some is still there!"

Exactly why I applied at a lessor payout when 62. I wanted my money back while still available. I've done the math, and with the early lower payout, I've currently gotten back more than if I waited to 65.

[Leaning Right]

The break-even point is somewhere around 78 years of age. If you take Social Security early, you are ahead of the game until you hit 78. After that, you are better off financially if you had waited.

For me, it was a no-brainer. I took Social Security as soon as possible, at 62. Because:

1. I don’t know if I’ll make it to 78.
2. I’ll be spending more money now - when I’m younger - than when I’m older.

Of course I might have a different opinion when I’m 95. We’ll see.

[CodeToad]

Taking it at 62 means you cross the curve at 84 years old, meaning, if you wait until 72 then at 84 you are making more money if you wait until 72.

That said, who cares? At 84, you’re probably not spending much.

[faucetman]

Take Social Security the first second you are eligible! PERIOD!

Get it while it’s still there. Get it BEFORE they change the rules AGAIN!

Why wait? Do you know how long you are going to live? NONE OF US DO!

The promise of MORE money if you wait is a government SCAM! It is appealing to your GREED!

If waiting is “better” for you, then WHY is the government trying to entice you to do it? BECAUSE it is better for THEM!

Don’t be a FOOL! Take the money and run.

[entropy12]

If you live to 90+ you will have lost some money.

[entropy12]

Not true if you invest the money received from age 62-65.

[Secret Agent Man]

thats just it, take it at 62, and maybe you don’t use it all, so save it.

[CodeToad]

“Not true if you invest the money received from age 62-65.”

“If” is for children. Anyone living on SSI isn’t the person who is going to invest.

[umgud]

Took mine at 66 and kept working, 68 now and still working, but there’s always a downside...........my kids moved back in.

[dakine]

Isn’t SS a cable bill and maybe an Electric bill worth of benefits ...?

I’m sure many of us folks here have been maxing out on OASDI by Oct/Nov...

I can see getting max. benefits when a loaf of bread is $30.00..

“Here Mr. Dakine is your $3200.00 SS benefit - that inflation priced bread will cost you $30.00.”

[Interesting Times]

What happens if you turned 62 in January and claimed Social Security retirement benefits? Your annual benefit (for life) will be 30% lower than if you’d waited until full retirement age to claim and 45% lower than if you’d waited until age 70, Kotlikoff calculates.

The phrase "annual benefit (for life)" dishonestly implies that it's referring to total lifetime benefits. In fact, while the yearly benefits are lower for claiming early, you also receive payments for a number of additional years. For most people, the lifetime break-even point is somewhere in their early 80s. The article goes on to provide a helpful example of how claiming early can cost you money. If you live to be 100.

This sort of misrepresentation pops up in article after article on Social Security, and it isn't an accident. A professional financial writer at Forbes can't possibly be confused by this.

Deferring claiming to age 70 does significantly benefit one entity: the federal government. That's because everyone who dies before 70 receives no Social Security payments at all.

[noiseman]

Inflation is the killer. I’m getting ready to retire, so have been burning up the calculator checking different scenarios. Everything looks great for the first 15 years or so. Then, inflation starts to bend the curve to the point where 20 to 30 years out you need double or triple the income just to maintain the same purchasing power. It’s incredibly difficult to stay ahead of inflation.

[colorado tanker]

It's usually a mistake to take Social Security early. You will probably lose money in the long run. I know some people who really got hurt and couldn't afford the hit. I am deferring.

Please don't take internet advice on this. Seek help from someone knowledgeable and analyze the decision based on your personal situation.

[A Navy Vet]

"The break-even point is somewhere around 78 years of age. If you take Social Security early, you are ahead of the game until you hit 78."

My math came to about 73 if I had waited for full repayment. Anyway, I suggest to anyone over 62 and not working to get their contributions back soonest. It's your money. However, be aware you have to pay yearly taxes on SS payments as yearly income. Not much, but it sucks.

[moovova]

They should let us take Social Security AND the new unemployment...at least until we’re 80.

[OrangeHoof]

I wanted to retire at 65 and then move to Panama so my money would go further. Got laid off again in December 2018, tried to find work for four months, prayed about it and was led to begin retirement early.

I don’t regret it at all but my situation is a bit unusual. I have pension incomes to augment my retirement SS and, being single, liquidated practically everything and moved down here with three suitcases and 12 boxes of items shipped here from the States. I can live comfortably on $1500-2000/mo, stay independent and enjoy a new adventure in a new country instead of being a pest to my niece’s family, living with them being the other affordable alternative.

I miss gumbo and good Texas barbecue but, otherwise, I have everything here that I need thanks to the internet and a VPN. There’s even an English-language church to attend and serve. So, life’s good.

I’m just thankful that I am not sweating out having to find a job as a 63-year-old in the current economy with the cost of rents and health care the way they are in the U.S. I’d be left eating cat food.