Never Do This if You’re a Busy Mom Trying to Pay Off Debt
It's a good idea to pick up a side gig if you're a mom who's eager to shed their debt. But there's one gig you should aim to avoid. Read on to learn more.
You may not think of age 62 as one of those milestone ages. But from a Social Security perspective, age 62 is huge. That’s because it’s the earliest age you can sign up for Social Security.
If you’re turning 62 this year, you may be wondering if it pays to take your benefits once they become available to you. But you should know that if you don’t wait until full retirement age to claim Social Security, your monthly benefit will be permanently reduced.
Meanwhile, if you’re turning 62 this year, it means you were born in 1961, and it means that your full retirement age is 67. Filing for Social Security this year will therefore result in a 30% hit to your benefits. Whether that’s problematic or not, and worth getting your money sooner or not, will depend on different factors.
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How’s your health?
Filing for Social Security at age 62 will easily slash your monthly benefit by a pretty substantial sum. But you might still come out ahead financially from a lifetime benefits perspective.
If your health isn’t great at this stage of life, and you’re anticipating a shortened life expectancy, then it could make financial sense to claim Social Security as soon as you’re able to. Doing might mean getting more lifetime income from the program. Plus, if you expect a shorter retirement, you deserve to kick it off sooner, and claiming Social Security might allow you to do that.
What’s your savings balance?
If you don’t have a lot of money socked away for retirement, then you may not want to claim Social Security at age 62 — especially if you have no reason to believe you’re looking at a shorter retirement. A larger monthly benefit could compensate for a smaller 401(k) or IRA balance.
On the flipside, if you have a nice-sized nest egg, claiming Social Security at age 62 might make it so you can retire at 62, or move over to part-time work. That may be a shift you’re eager to embrace.
Do keep in mind, though, that if you continue to work while collecting Social Security before having reached full retirement age, you’ll be subject to the earnings test limit. You’ll risk having some of your Social Security income withheld if your paychecks are too high, though that money will be added to your benefit payments later in life.
What are your plans for retirement?
The loftier your retirement goals are, the more you might regret filing for Social Security at age 62. A smaller monthly benefit might make it tougher to afford the things you want to do.
That said, you should consider your age — and associated health and energy level — when thinking about those goals. Maybe you want to explore the country’s national parks. That’s the sort of thing you might have an easier time doing at 62 compared to 67. And if claiming Social Security is what allows you to pull off a cross-country trip and national parks tour, so be it.
Many people rush to claim Social Security the moment they become eligible for benefits. Doing so could be a reasonable move for you under the right circumstances. But make sure to think through your decision carefully so you don’t end up regretting it.
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