Take Social Security at 62? Here when it makes sense to

It is best to wait until you start taking Social Security retirement benefits from the 70s – even if it means tapping into your retirement assets at the bottom of a bear market. Why? Because the guaranteed, risk-free 8% annual Social Security benefit increase is an unbeatable deal.

And yet in 2018 only 6% of women and 4% of men waited until they turned 70 to claim benefits. Most advisors and financial columnists qualify at the age of 62 and wave their fingers at people taking Social Security. Yet in 2018 some 31% of women and 27% of men exploited social security. It is difficult to say when someone is offering you money now.

There are some bad reasons for doing this, such as all your friends doing it or because you will get better benefits before Social Security runs out of money. I suspect that before this happens, Congress will raise payroll taxes for high-income people rather than cutting benefits for one of the country’s largest, most active voting blocks.

But there are some good reasons to take advantage early, and the recession in the wake of the COVID19 epidemic has dramatically exposed one of them: Many people don’t have much choice. We will meet later.

One of the best reasons to seek Social Security at 62 is if you have got a serious illness or a chronic medical condition. As with all retirement planning, you are acting like an amateur acting, predicting your own life expectancy to determine how long you will need your money.

Research shows that the more chronic conditions you have, the shorter your lifespan. A 2014 study conducted by researchers at Johns Hopkins University showed that a 67-year-old man with no chronic condition would live an average of 22.6 years (about 90), but a person with five chronic conditions would have an average life of less than 7.7 Years compared to a healthy 67-year-old.

The chronic conditions the researchers observed included heart disease, cancer, chronic obstructive lung disease, stroke, and Alzheimer’s disease. Other common chronic diseases that use data from Medicare and Medicaid, according to the Chronic Conditions Data Warehouse, include hypertension, arthritis, diabetes, and kidney disease. Many people who have these conditions and have been successfully treated live longer, live happier lives, so be sure to consult your doctor on your condition. But if the prognosis is not great for your longevity – especially if you have some chronic conditions or one of them has a family history – then taking Social Security early should definitely be on the table.

Coronovirus brought the second large real-world factor to the center. A 2018 survey of about 5,000 people from Willis Towers Watson found that 37% of employees expected to work 70%, up from 30% two years ago. By February 2019, more than 20% of adults 65 and older were either working or doubling the percentage since 1985 – and the Bureau of Labor Statistics estimated that 13 million Americans aged 65 and over in 2024 Will be in labor force. .

COVID-19 and the actions taken by governments to stop its spread have put nearly 40 million Americans out of work, the deepest, steepest decline in history. Labor force participation rates fell by more than seven percent, a surprising decline. Many of those older workers were, which three researchers concluded, have probably left the labor force for good.

“We see a big increase in those who claim to retire,” writes Olivier Koibon of the University of Texas at Austin, Yuri Gorodnychenko of the University of California at Berkeley, and Michael Weber of the Booth School of Business at the University of Chicago. “This makes early retirement a major force for declining labor force participation …”. [it] Suggests that the start of the Kovid-19 crisis was caused by a wave before planned retirement. “

This led to a mini-run on 401 (k) s, IRAs and other retirement accounts. A new Bankrate poll shows that more than 27% of Americans who are still working or recently unemployed withdrew money from their retirement accounts. Some 62% of those cited loss of income as the main reason.

The last time we showed that tapping into your retirement account to delay taking Social Security for as long as you can is not bad. But 45% of baby boomers have nothing left for retirement. So, if you have just lost your job and have little or no retirement savings, you have very few options: Take Social Security at 62 and get on with life.

Sometimes you just do what you do.