Filing Early for Social Security: When It Makes Sense

“It’s better to file for Social Security later rather than earlier,” is common advice spread by financial advisors and laymen alike. After all, if you delay receiving benefits for as long as you can, payments can go up significantly.

The advantage of delaying taking benefits will apply (and appeal) to most people. But filing earlier (or as soon as one is eligible) can be the right choice for many people as well. Here are some situations when that may apply.

You Want to Retire Now—Or Are Unwillingly Retired

Unless you have other forms of income, filing for Social Security is the only way you’ll survive without a steady job. If you’re laid off or find your job too difficult to maintain, it may be sensible to retire and take your benefits early. Usually, that’s not a good idea, but it can be the only option for those struggling financially at an older age. If you have a choice, try to wait until your full retirement age, usually 66 or 67. Taking it before then will lower your monthly benefit.

Here’s an escape route worth knowing about, just in case: If you are lucky and suddenly secure a job or other income source within a year after you take early retirement, you have the option to pay back the benefits you got from Social Security and refile later when your benefits will be higher. The process is called a withdrawal and you get just one do-over opportunity.

You’re in Poor Health

Although life expectancy typically continues to rise, many seniors still worry about dying early. If you have a chronic condition or a terminal illness, you might consider taking your benefits early. “Delaying benefits doesn’t make sense if there is a good chance you won’t be around to enjoy it,” says CFP Jennifer Davis of Halpern Financial.

You Have Dependents

If you have children or other relatives who qualify as dependents on your tax return, they may be eligible for dependent benefits when you take your Social Security payouts. The math might work out for all. The details can be confusing for the layperson; therefore, consult a qualified advisor.

You’re Divorced or Have a Deceased Spouse

Filing early can make financial sense for those who are divorced but were married at least 10 years, as well as those who’ve lost a partner. The survivor benefits can be a great boon, especially for a single senior. Each person can claim one benefit (their own or their spouse’s) at a time and wait to take the other benefit later.

Your Spouse Can Take Benefits Later

If you’re still married, you may only need to take one person’s Social Security benefits early. This strategy can give you some income immediately, while the other person’s benefits continue to grow. Make sure to do the math with the official Social Security calculator.

You Have No Other Assets

Social Security was never intended to be the sole support of people’s retirement years; for most folks, it is (or should be) a supplement to their income. But suppose a rampaging bear market has played havoc with your retirement accounts and plans? For example, the Great Recession of 2008 was a game-changer, erasing a decade’s worth of gains in many investment portfolios. If continuing to work isn’t an option, it might be best to ensure an immediate steady income stream via your benefits.

The Bottom Line

The common advice still holds true for many, so don’t automatically assume that filing early for Social Security is a good idea. “It’s important to avoid the temptation to take Social Security early just because it’s available,” Davis says. “It may be the only steady source of income (that grows with the cost of living) an individual has.”

If you’re not certain how applicable your situation is, consult an advisor.