As a federal employee, you will enjoy retirement income from three sources: Your annuity, your Thrift Savings Plan (TSP), and your Social Security benefits. While benefits from your annuity and your TSP withdrawals won’t begin until after you retire, some people do choose to claim their Social Security checks early. But there are various benefits and drawbacks to doing so.
Your benefits will be lowered. You can claim Social Security as early as age 62, but your checks will be permanently lower than if you wait until full retirement age. For some people, it’s a worthwhile trade-off.
Part of your checks might be withheld. If you’re still working after filing an early Social Security claim, some of your benefits might be withheld if you earn over a certain threshold.
How long do you expect to live? No one knows for sure, of course, but the longevity of your parents and your current state of health can give you some clues. If you expect to live a long time, you’ll need as much income as you can generate. It might be better to wait until full retirement age, or even up to age 70, so that you can claim a larger monthly benefits check.
Perhaps you need the money… It may be better to delay your claim until at least your full retirement age (65 to 67, depending upon your birth date). But some people become partially or fully disabled by age 62 or so. If you had to end your career early, maybe you need your Social Security benefits now.
But do you really need the money? For each year that you delay your claim, Social Security benefits grow by about 7 percent. So it’s usually not a good idea to take benefits early, unless you really need them to cover living expenses.
What about pensions? If you’re due to receive certain types of government pensions, your Social Security benefits could be seriously reduced or even eliminated if you file your claim early.
Social Security is a complicated system, and what works for one person might not work for another. Never make assumptions about your benefits and remember that one size does not fit all. Give us a call, and we can help you decide how to proceed in a way that works for your situation.
