Due to the COVID-19 pandemic, there are many reasons why people may consider retiring sooner than they planned. Retiring could mean claiming your Social Security or pension benefits or tapping into savings earlier than planned. So we will be Navigating an early and unexpected retirement during COVID-19 in 3 parts.
Below are some things to consider to help you understand and weigh your options when considering an unexpected retirement.
Claiming Social Security
The age when you start collecting Social Security can make a big difference in the amount you’ll get each month. For example, you can claim your Social Security retirement benefits as early as age 62. Still, the amount you receive each month could be 30 percent less than what you’ll receive at your full retirement age or up to 70 percent of what you’re eligible for to get at age 70.
If you need to start collecting your benefit early because of your financial situation, here are a few options that can help you maximize your benefit if your plans or employment situation changes.
Withdrawing Your Application
If you’re able to secure a job or another income source, you have a one-time option to withdraw your application for Social Security benefits as long as it’s within 12 months of when you applied.
However, keep in mind that this can be complicated and possibly expensive. If you have already started receiving benefits, you’ll need to repay what you and your family received – and all at once. Your spouse and other beneficiaries must also provide written consent to the withdrawal.
Suspending your benefits
Suppose you’ve already reached your full retirement age and you’re financially able to. In that case, you can also ask the Social Security Administration to suspend your payments, which will allow your monthly benefit to grow until age 70.
What if you can’t or don’t want to work in retirement?
If your plans or employment situation doesn’t change and you still want to defer taking Social Security till age 70, there is another option available to older homeowners. You can tap into your home equity monthly using a Home Equity Conversion Mortgage Line of Credit (HECMLOC)option. With this program, you can withdraw as much or as little as you need each month to pay your bills. You can do this between age 62 and age 70 and defer taking your Social Security and not working at all. You can be fully retired at 62 and still get 30% more from Social Security beginning at age 70. In addition, it eliminates your principal and interest mortgage payment if you currently have one, which lowers the amount you need each month to live. *UPDATE* We now can use this program at age 55.
Make an appointment to learn more about this HECMLOC program for your clients or yourself. You can request a consultation at our website or call us today to set up a time to talk.