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Retiring Early and the Impact On Social Security

What You Need to Know about Social Security
Claiming Social Security before full retirement age (FRA) has consequences–namely, that you'll get stuck with a lower monthly benefit for life.

The attorneys at Beck, Lenox & Stolzer Estate Planning and Elder Law, LLC, are often privy to the hopes and dreams of our clients, and nothing makes us feel better than seeing those play out. “I’m going to work until I can collect my full Social Security, and then I’ll throw myself a big party to celebrate” is a common statement we hear. Unfortunately, not everyone retires because they want to. A lost job, serious illness or large life change could put you into an early, unwanted, retirement. Retiring early and the impact on Social Security can become a big concern. A recent article from USA Today titled “Forced to retire early? 3 things you can do to put off filing for Social Security” explores the options.

The first thing most people think of is taking Social Security benefits before Full Retirement Age (FRA), which has long-term consequences. The idea seems logical: by taking benefits, you’ll protect your retirement nest egg. However, you’ll receive a lower monthly benefit for life. Instead, consider a few alternatives.

Pursue a part-time job. If finding a full-time job doesn’t work, or if you aren’t physically or mentally able to work full time, a lower-stress part time job could fill in the financial gaps. Employers are eager to find qualified workers, in all kinds of workplaces. You might score a remote part-time job, which would be ideal if mobility is an issue. You may prefer a position where you interact with the public, like the greeter at big box stores. If you’re savvy enough to score a high paycheck, you might be able to get by on a different income level, while letting Social Security benefits grow.

Revise your spending significantly. Take a look at your cashflow. If you’re in a hot housing market, can you sell your current home and move into smaller quarters? Does your family still need two (or three) cars? If you’re among the average Americans who dine out at restaurants several times a week, a return to eating at home could help your budgeting. How many streaming services are you paying for every week?

In some instances, you can’t cut spending, especially for medical care. However, chances are there are some cuts you can make to help trim spending and reduce the withdrawals from retirement accounts, including IRAs, SEPs or 401(k)s.

Can your home create income? Monetizing your home can take a few different forms. Today’s reverse mortgages are not the same as they were thirty years ago. Depending on how much equity you have in your home, you might find the monthly checks help avoid having to take Social Security early.

Could you take in a roommate to help with monthly bills? Obviously, this step requires a lot of thought. However, if an additional $500 would tide you over, it might be a viable option—and you may enjoy the company. There are non-profit organizations that pair seniors with roommates. There are also online apps for people to rent out their fenced backyards by the hour to dog owners who need a safe place to play with their pets.

Retiring early and its impact on Social Security should be on everyone’s radar as they are three to five years from retirement. Knowing there are options can make financial stress a little less overwhelming. Do your homework and find what works for your situation. And make sure you have taken care of your estate planning while you are at it.  An estate planning attorney, like Jay Lenox from Beck, Lenox & Stolzer, is a good professional to help you accomplish your legal goals.

Reference: USA Today (June 26, 2022) “Forced to retire early? 3 things you can do to put off filing for Social Security”


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