I am on a Social Security roll this week. I hear this a lot: “I am claiming Social Security as soon as I turn 62 so that I can get my retirement benefits before the government takes them away from me.” There are several different ways of assessing this argument. None of them have persuaded me that this alone is a sufficient reason for claiming at age 62.
1. “I just want that money to spend and this is the best rationalization I can think of for getting it now.” I suspect that this is the real reason that many folks claim early. They support that decision with the argument that the government might take their benefit it away. They know with their rational mind that claiming early is not a good financial decision but their desire for the extra income – now – is too strong. These folks just won’t admit to themselves that this is the reason.
2. “The government might raise the retirement age before I claim my benefits.” Yes this is possible but I do not think it applies to folks who are already 62 or close to it. First, in the discussions of raising the retirement age, I have not seen or heard any lawmaker or expert suggest raising the minimum retirement age, only the full retirement age. Second, in most of the discussions of Social Security fixes, changes in the retirement age would not apply to those who are already in their late 50’s or early 60’s.
3. “The government will cut my benefits before I can claim them.” This is also possible for some but again, discussions of cutting benefits have in all cases included exemptions for those already approaching retirement age. Also, let’s assume that in four years – when you are turning 66 – the government is so desperate that it cuts your Social Security benefit before you file at full retirement age. If things are that bad, don’t you think they would also cut benefits for those who are younger than 66, including those who had already filed? I do. There is nothing that would prevent this from happening.
4. “The Social Security system will disappear before I turn 66.” If this happens, it means one of two things: The government is broke or the Tea Party has taken over Congress and made some cruel decisions. In either case, do you really think your existing benefit will be preserved? Yes, you could be proud that you already received some checks before they were cut off. But do you really want to surrender a lifetime of increased benefits based on this fear?
As you can see, I am not a believer in the “take it while you can get it” argument in favor of claiming an early Social Security retirement. We should not be making important and permanent decisions based on a fear that is not reasonably fact-based.
However, I am willing to listen to other arguments. Do you have any?