Prevailing logic is that citizens should wait as long as possible to collect Social Security so their payments will be higher, say BlackRock experts, but there are special circumstances when a recipient can benefit by collecting early.
Those who opt to collect Social Security at age 62 will reduce their benefits by 20 percent to 30 percent, depending on their normal retirement age, which could amount to hundreds of thousands of dollars in lifetime payouts, says Chad Terry, director of Investment and Retirement Education for BlackRock Inc., the world’s largest asset manager.
But in some instances, collecting benefits early actually makes financial sense: For instance, the lower earner in a married couple may want to collect as soon as possible while the higher earner waits as long as possible.
“It’s the way survivor benefits work,” says Ron Kron, director of BlackRock’s advisor education group. “When the higher earner passes away, the lower earner has in essence the ability to inherit the higher earner’s benefit, making their own benefit no longer relevant. The sooner the lower earner starts collecting, says Kron, the better off they’re going to be. Because at some point, that benefit is going to stop being relevant and they’re going to switch over to that higher survivor benefit.”