Ask Clark: Should I File for Social Security Now?

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Social Security benefits
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A lot of Americans are finding themselves laid off or with hours cut back at work. If you’re in your early 60s, you may be wondering if you should file for Social Security.

Money expert Clark Howard is often pretty inflexible on this point: His typical default position is that you should wait as long as possible to claim Social Security.

But the unprecedented disruption the coronavirus pandemic has caused in people’s lives creates a possible exception to his usually ironclad rule.

What You Need to Know About Claiming Social Security Early

Age 62 is the earliest you can possibly take Social Security. But taking it that early means you only get a partial benefit. For every year you wait after 62, you get a benefit that’s roughly 8% larger.

This growth in benefit happens all the way until you reach 70, at which point your benefit stops growing.

That’s why Clark has said it’s better — from a dollars and cents perspective — to wait as long as possible to claim Social Security benefits.

However, in today’s challenging economic climate, a lot of people in their 60s may unexpectedly find themselves jobless. That shifts the calculus on when to take Social Security a bit for some people, Clark says.

“If you have maintained employment, I would not now suddenly take Social Security earlier than you intended,” he says. “[But] if, as a result of coronavirus, you’ve lost your job and you’re worried about being able to regain the income stream you had before, then you could go ahead and start receiving Social Security.”

Should your work come back, you’re allowed to earn up to $18,240 annually when you’re under full retirement age. If you cross that threshold, $1 will be deducted from your benefit for every $2 earned above the limit.

Different rules with higher limits apply for the year in which you reach full retirement age. Get full details here.

Recent Events Shift the Math on When to Take Social Security

Too many of us mistakenly file for Social Security earlier than would mathematically be in our best interest, Clark says.

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In fact, one recent study found that taking Social Security too early could cost you in the neighborhood of $111,000.

But recent events have shifted the calculation older people are doing when they consider when to claim Social Security.

“There’s more interest in filing for Social Security now because people are worried about their mortality. And yet here I am saying, ‘Well, if you wait, you’re going to make so much more money from Social Security over the years,'” Clark acknowledges.

“But if you’re worried that you’re not going to have those years, that would be a psychological reason to go ahead and file for Social Security.”

Ultimately, the decision is yours once you hit 62. Just know that by claiming Social Security today, you’ll get a lower monthly benefit than if you are able to wait.

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