Understanding how social security benefits work is important for any seniors who are considering retirement. Taking an early retirement and starting to collect social security early has consequences that many retirees are not aware of when they do it. The most costly can be the reduction of monthly payments made when early retirement is taken.

The Cost of Early Retirement

If you or your spouse chooses to retire at the age of 62 or 63 and begin to claim social security benefits once retired, there is a marked reduction of the monthly payment that will be received. The justification for the reduction in monthly payments is to counter the fact that payments are being started before full retirement age, or even past full retirement. While it may not seem like much at the time there can be serious consequences down the road, particularly if medical costs begin to eat away at the social security payments.

Spouses Feel the Pinch

This reduction in payment can also affect your spouse. Typically social security benefits are based upon the income of the primary household income. If benefits are claimed before reaching full retirement age then the reduce payments will carry over to the spouse as well if the spouse is claiming that income for benefits. This also means that should something happen to one member of the couple, the reduce payments still apply for the surviving spouse.

Understanding how the early retirement penalty works and how to best claim your benefits are a key element to a successful retirement. For legal questions about benefits, contact the experts at Stano Law group.