Should you take Social Security early?

As you're looking ahead to retirement, you may be tempted to take your Social Security payments as early as age 62 (or earlier for survivor benefits). But that's a decision that shouldn't be taken lightly.

In some cases early Social Security can be a lifesaver — if you lose your job, for example, or you have little in the way of other resources. Or maybe you face an unexpected disability or your health takes a turn. But in the long run, most people are better off waiting until full retirement age (usually 66 for people born from 1943 to 1954) or longer to start receiving benefits.

The chart below shows why. Look at the difference in estimated monthly payments for a top earner who has been making Social Security tax payments continually throughout his or her career.

Age 2018 Maximum Monthly Social Security check
62 $2,158
66 (full retirement age) $2,589
70 $3,698

Source: (2018)

Often people don't take into account just how much money they risk losing over the long run if they take Social Security early and live beyond their life expectancy. Each year your Social Security payment changes to align with cost-of-living adjustments (COLA) on a percentage basis. So if you take your payments early, those adjustments will be made on a smaller amount. As a result, over time, your COLA increases will add up to less money than if you had waited.

Finally, keep in mind your spouse is eligible to receive your monthly payment amount as a survivor benefit (provided it is higher than his or her own amount). If you take your benefits early, you're leaving a smaller payment for the remainder of your spouse's life.

Talk to an Ameriprise financial advisor to learn more about how Social Security fits into your retirement income plan and to help you decide when you should start collecting benefits.