The Social Security Administration, SSA provides Social Security benefits that make up the primary source of income for almost 63 million Americans each month as of June 2019. These Social Security benefits are calculated based on the amount of social security taxes filed on the 35 highest-paid years in the workforce. Many people wait until they reach full retirement age (65 minimum to 67 maximum), to maximize their social security benefits to the exact monthly amount they are entitled to.

This doesn't imply that you can't claim your social security earlier. You can, in fact, claim your social security benefits as early as age 62 or even earlier if there is an underlying cause or emergency such as:

  • paying for a caretaker of a special child and
  • you have sufficient social security 'balance', i.e., the amount of minimum social security taxes paid to be eligible.

No matter when you decide to claim your social security, it is important you ask yourself these three basic questions.

I.Do you really need the money right away?

The SSA imposes certain conditions if you decide to claim your social security benefits before full retirement age. This includes losing a set percentage of benefits on early claims. The percentage of reductions depends on how early you claim your benefits: for instance, people filing for benefits 5 years ahead of the full retirement age, FRA, will be subject to a 30% reduction in total social security benefits. Similarly, people filing 4 years ahead of the FRA will be subject to a 25% reduction and so on.

It is for this plain reason that you must ask yourself if it is really worth it to lost so much while you are capable of waiting to maximize your benefits to the full. So before you decide to file your social security claims early on, make sure that you are actually okay with the reductions imposed on early claims.

II.Are you still working?

Depending on your application and job status, the Social Security Administration allows you to work while receiving social security benefits. However, if you do both simultaneously before reaching FRA, then the SSA will withhold a certain portion of your benefits if your income from the job exceeds the disability threshold amount, i.e., the substantial gainful activity, SGA – which is $1220 for non-blind and $2040 for blind as of 2019.

The amount for the SGA varies each year. No matter how little you earn, if your income threshold crosses to the SGA amount set for that year, then you will be subject to lose $1 in benefit for every $2 you earn from your job.

Fortunately, this amount is only withheld as opposed to being deducted from your benefits; so it would ultimately be added back to your benefits once you reach your full retirement age. However, if you decide to claim your benefits early, your benefit amount will substantially be reduced. It is for this reason that your must reconsider claiming your benefits before reaching FRA or early retirement.

III.How healthy you are?

The one problem with filing Social Security early is the potential to get your claims reduced or withheld substantially. On the other hand, filing for your claims early while you don't expect to live a healthy or longer life, for instance due to an untreatable disease, might be a smart move.

For instance, suppose you are entitled to a monthly social security benefit of $1400 at 67, your FRA. Filing for the benefits at 60 would cause the amount to be reduced to a $1100, however, you will also receive 60 additional payments. This is due to the underlying estimations by the SSA that the average 65-year-old American will live up until age 80 or a very little population beyond that. But if you were to die at age 72 due to an underlying disability or disease, then claiming early would be useful to you with the additional amount of $21000 early on, rather than claiming your benefits at 67 only for 5 years.

With that said, it is imperative that you analyze your health conditions carefully and file your claims early on if it's poor. If you are unsure of when and how to file your social security claims, you might consider discussing with our Social Security Attorney.