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Choosing the right time to start collecting Social Security benefits profoundly influences your financial stability and life enjoyment. While some individuals prefer working longer to boost their retirement funds, others opt to start receiving benefits at age 62, the earliest possible age for Social Security withdrawals.
Opting for an early Social Security check results in reduced monthly payments. Nevertheless, for some, receiving a smaller check might be a strategic choice due to personal health, financial circumstances, or life expectancy considerations.
Why Opt for a Reduced Social Security Check?
The Advantage of Bridging Finances
Receiving a smaller Social Security check earlier could ease the transition into retirement in your early 60s, advises Paul Tyler, host of “That Annuity Show.” Tyler suggests that whether this decision is voluntary or prompted by job market realities, a modest, yet steady income can help manage finances until downsizing is complete.
Consulting with your financial advisor could reveal options for retiring early while drawing a smaller Social Security benefit. For instance, determine eligibility to withdraw from retirement accounts like a 401(k) penalty-free after age 55, guided by the Rule of 55, pertinent to current employer accounts.
Relieving Your Family’s Financial Burden
Research worldwide highlights how retirement positively impacts physical and mental health. For instance, studies in Finland and the UK found health improvements post-early retirement (source). Likewise, a US study discovered that active middle-aged individuals saved significantly on healthcare annually (source).
Tyler notes, “If longevity runs in your family, delaying retirement could be beneficial, but significant health issues might prompt early retirement to reduce future financial stress on caregivers.”
Savor Your Retirement Savings Early
For those who began financial planning early and have the figures to support it, taking a smaller check could be rewarding. Experts advise that couples should save to cover 70% to 90% of their pre-retirement income to maintain their lifestyle post-retirement.
Tyler concludes, “If your spouse enjoys a higher income and is older, claiming your Social Security early could be advantageous—consult with a financial expert before proceeding.”
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