It is hard to make “one-rule fits all” generalizations about taking your Social Security benefits. When it comes to this decision, the best “one-rule generalization” is that “One Size Fits One”. Because we are all different, each Social Security decision could and should be custom made like a fine suit or custom dress. Given this understanding however, some important considerations may apply to taking benefit before full retirement age or later.
The #1 reason to take benefit early is poor health. If a worker knows that he or she has a limited life expectancy, then taking benefits early is almost always the right decision especially if you are single.
Retiring single workers do not have any ability to pass along benefits if they do not have a surviving spouse or dependent minor children. It is possible that all those years of paying FICA taxes for Social Security retirement will not generate a full payback because of limited life expectancy. Health is the true wild card in Social Security planning. Single people cannot name a beneficiary for their unused benefits.
The #2 reason to take benefit early is financial necessity. Workers who lost their jobs, or experience a financial catastrophe can use Social Security as the safety net is was designed to be way back in 1935. During the great recession of 2008 and 2009, people were laid off, lost 50% of the value in their 401(k) accounts, and saw their house resale value cut by 40%.
Social Security payments saved many workers from bankruptcy and or financial ruin.
The #3 reason is just the flip side of reason #2. If you are financially secure and have excess income relative to your needs, you might want to take benefits early. The Social Security income for these fortunate folks can be diverted into legacy giving programs for children, grandchildren or charities. There are powerful ways to leverage Social Security income to create new capital. This new capital can then be used to really change the quality of life for those in need.
The Social Security program is part of the DNA of this country. The decision about when and how to take benefits must be clearly thought out. It should not be made on a casual recommendation from Uncle Harry at the family picnic.