If you are in the State of New Jersey and would like to discuss your estate plan, our team at Willis Law Group LLC is here to provide you with any assistance that you may need. We are pleased to now also offer Snap Estate Plan services, where you can acquire Attorney-Drafted Estate Plans from the comfort of your own home. To schedule a virtual consultation with us, give our main office a call at (877) 296-2575.
As a result of the COVID-19 pandemic, unemployment has been skyrocketing. And with that happening, seniors who lose their jobs may be tempted to claim Social Security benefits early. But should they, given the resulting reduction in future benefits? The answer will vary depending on each situation, but seniors may be able to claim and not sacrifice much in terms of their future benefits.
While workers can claim Social Security benefits as early as age 62, the better financial decision is usually to wait as long as possible before taking benefits. If you take Social Security between age 62 and your full retirement age, your benefits will be permanently reduced to account for you being paid over a longer period of time.
Individuals who file at age 62 this year will receive 72 percent of their full Social Security benefits. On the other hand, if you delay taking retirement beyond your full retirement age, your benefit will increase by 6 to 8 percent for every year that you delay (depending on when you were born), in addition to any cost of living increases. This extra income could prove to be extremely beneficial for individuals who live a long life.
Unfortunately, many seniors who lose their job due to the coronavirus pandemic may find it necessary to apply for benefits early, potentially losing large quantities of money in future benefits. Before rushing to apply for early retirement benefits, consider all of your options. If you are lucky enough to have substantial savings, it may make sense to spend your savings rather than take benefits early. You may also be in a position to apply for unemployment benefits that would allow you to further delay taking benefits.
If you do not have any savings or unemployment benefits to fall back on, your only option may be to claim benefits. However, if you do claim early and then go back to work, you may have the ability to increase those benefits again. If you are able to stop the benefits within 12 months of starting, you can withdraw the application, repay the benefits collected, and then still be eligible for the higher benefit amount at your full retirement age. It would essentially function as a one-year interest-free loan.
If you take benefits early but are not able to stop the benefits within 12 months, you can still suspend your payments to earn higher benefits. For example, if you start collecting at age 62 but no longer need the income once you reach your full retirement age, you could suspend benefits until age 70. While you will not get a complete do-over, you would earn delayed retirement credits that would increase your ultimate benefit amount when you collect at age 70.
Whatever you decide, consider all of your options carefully and talk things over with your attorney or financial planner before making any rash decisions. As always, our team at the Willis Law Group LLC is here to provide you with any assistance that you may need. Please do not hesitate to call us at (877) 296-2575.