By David Freitag ~
When difficult financial times arrive because of turmoil in the stock market or a serious new health condition, it’s good to know that Social Security can often be a significant safety net for people 62 or older.
When financial headlines broadcast 5-10% daily market losses, it is important to remember that Social Security benefits did not and do not go down. In fact, Social Security benefits either stay the same or increase gradually, based on cost-of-living increases. These benefits are a true “non-correlated asset class” that does not move with the market.
One benefit of taking Social Security earlier than planned is having extra income if you are struggling to pay for mortgages, utility bills, medical insurance, transportation costs, food, and entertainment. They can be the lifeline that provides financial support to people in need.
I asked Dave Freitag about any difficulties that might arise when accessing your Social Security benefits. He provided valuable information the pros and cons of taking these benefits early.
Dave: To access this new income life-line, a few minutes spent on the SSA.gov website can jump start this cash flow that will put the safety net in place.
The process is easy and convenient. You don’t have to fill out loan forms, provide income statements, take hours shopping for the ‘best rate,’ or wait for an act of Congress to pass relief legislation. You just have to apply.
Dave: Here is the problem. After one year, the Social Security filing decision becomes very difficult, if not impossible, to change. Taking benefit early, when you have a long life-expectancy, might have real downstream disadvantages.
However, if current financial needs or health concerns seem to be the most urgent, it is important to remember that applying for Social Security could very well be one way to weather the storm.
Remember, after the emergency has passed, and at full retirement age, you can ask that your benefits be voluntarily suspended. The suspension will allow you to earn delayed retirement credits that could help offset the early filing penalty.
Dave: Look at the big picture to consider the advantages and disadvantages of claiming benefits early, before you make the final decision.
David Freitag, an industry veteran in financial services and wealth management, brings a deep passion and unparalleled knowledge of Social Security filing strategies and retirement income planning to his current role as a financial planning consultant for the Advanced Concepts Design Group of Massachusetts Mutual Life Insurance Company (MassMutual). His also holds a Master of Education and Bachelor of Science degrees from the University of Maryland.