Considering Early Social Security Retirement at 62? Crucial Facts You Need to Be Aware Of.
In making financial decisions about when to claim Social Security benefits, it's crucial to consider the potential implications for spouses.
Claiming Social Security benefits early can affect the amount of survivor benefits a spouse receives. If a higher earner in a household claims benefits at 62, it could result in leaving their spouse with a smaller survivor benefit. This situation could cause financial stress and difficulty in meeting expenses, especially if the survivor outlives the higher earner.
For individuals born in 1960 or later, full retirement age is 67. Starting Social Security benefits at 62 results in a permanent reduction, with the reduction in benefits for claiming early being as high as 30%. This reduction could potentially leave a spouse with less money in the long run.
If you claim Social Security before full retirement age and are still working, you will be subject to an earnings test. Beyond the earnings test limit in 2025, $1 in Social Security benefits will be withheld for every $2 of earnings. However, benefits withheld due to exceeding the earnings-test limit are not forfeited completely; they are returned in the form of larger monthly benefits once full retirement age is reached.
It's important to understand the ramifications of taking benefits early and being prepared to deal with the aftermath. Running the numbers to see how much Social Security, if any, you're likely to lose temporarily due to the earnings test is essential when deciding when to claim Social Security.
Claiming Social Security at 62 may not be financially viable if one has limited retirement savings due to the reduction in benefits. On the other hand, Social Security survivor benefits can be crucial for a spouse if they outlive the higher earner.
The earnings test may affect the decision of when to claim Social Security benefits, as claiming early may not be the optimal age for everyone. Any reduction in Social Security benefits due to early claiming is permanent, so it's essential to make an informed decision.
In conclusion, the financial decisions regarding Social Security can significantly impact a spouse's financial situation. It's advisable to seek professional advice and carefully consider all factors before making a decision about when to claim Social Security benefits.
