If you're between the ages of 62 and 70, you can take Social Security retirement. And depending on your situation, now might be the perfect time to do so. However, it's really important to review some critical things that could make now the wrong time to claim your benefit.
This includes your health, wealth, other sources of income, and how a few things can compound and really impact your retirement. Keep reading to make sure you're truly ready before you make the call to claim your Social Security benefit.
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Will you outlive your other retirement savings if you claim too early?
If you're considering taking Social Security soon, you're probably close to age 65 or over. Some important statistics to consider first:
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The average 65-year-old American will live beyond age 80.
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40% of single and 20% of married 65-plus Americans get 90% of their income from Social Security.
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The median 65-plus American has less than $61,000 in their 401(k).
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Your Social Security benefit is cut as much as 6.67% for every year you claim early.
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The most popular age to claim Social Security is 62. Unfortunately, far too many of those who claim early don't have enough retirement savings to offset the benefit cut if you claim before your full retirement age. When this is paired with life expectancies for men and women that have most of us living into our 80s, it makes it far more likely that you'll run out of money and be wholly dependent on your monthly Social Security check late in life, just when your care needs could be at their highest and most expensive.
Plan to keep working? Not so fast
Plenty of early Social Security filers plan to continue earning a paycheck for at least a few years before fully retiring. However, there's a big fat catch that could backfire on you. If you claim Social Security before you reach your full retirement age (between 66 and 67 depending on when you were born), there is a relatively low cap to how much you can earn before your Social Security check starts getting cut.
Don't get a surprise cut to your Social Security check by earning too much money. Image source: Getty Images.
For 2017, every $2 you earn above $16,920 will cost you $1 in Social Security payments. Here's how that looks in plain math: If you earn $26,920 this year ($10,000 above the earnings limit) and haven't reached full retirement age, your Social Security benefit will be cut by $5,000.
There's plenty of reason why it could make sense to work some after taking Social Security. Just make sure you understand the income limits before taking an unexpected hit to the income you were expecting to get.