Retirement Social Security

6 Savvy Reasons To Take Social Security Benefits Early and Build a Bigger Nest Egg

Discover how starting Social Security now could mean bigger gains later.

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Updated Nov. 14, 2024
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Many experts advise against taking Social Security early. Retirees who can wait until later to claim their Social Security checks will enjoy a larger monthly benefit.

But for some folks, waiting around isn’t a good option. If you've reached the age of 62 and can finally tap into your Social Security benefits, it might make sense to claim those benefits before full retirement age, which is 67 for everyone born in 1960 or later.

Depending on your situation, using Social Security benefits to build a bigger nest egg now could be a better strategy than waiting for a bigger Social Security check later. Here are some of the reasons not to delay taking Social Security.

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You can avoid tapping your nest egg and let it grow

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If you start receiving a Social Security check now, you can potentially avoid touching your nest egg of savings and investments. The delay in withdrawing from these accounts gives your money a bit more time to grow so you can get ahead financially.

Depending on your situation, the potential growth could be significant. For example, let’s say you have $250,000 invested, and the funds are growing at an annual rate of 6%. If you can delay touching the money for 10 years, your nest egg could grow to around $448,000.

The ability to grow your nest egg might make it worth taking Social Security earlier, even if it means a smaller monthly benefit.

You can cover unexpected expenses without going into debt

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When you have funds coming in every month from Social Security, you can use the money to cover unexpected expenses without racking up debt or dipping into your nest egg.

Life tends to throw unexpected expenses into the mix regularly. Whether you are facing medical bills or a car repair, leaning on Social Security benefits can help you avoid slipping into debt.

You might have more money if you live longer than you expect

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Many retirees are living much longer than they originally expected. In fact, some retirees are enjoying a full 100 years of life. Although this is welcome news, it can mean having to cover costs for a much longer retirement than you anticipated.

When you choose to take Social Security early, you lock in a lower monthly benefit check for your lifetime. That's the downside of filing early.

However, choosing to use Social Security benefits to both cover costs now and potentially swell your nest egg could pay off if your investments do well, providing you with more cash for a longer retirement.

You can help adult children without cracking into your nest egg

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Many American parents provide some level of financial support to their adult children. In fact, a recent survey from Savings.com found that 47% of parents with grown children provide some form of financial support to their kids, with an average of $1,384 in monthly financial support.

If you are a parent helping out a child, cracking your own nest egg could spell disaster for your retirement.

As an alternative, you could choose to take Social Security benefits early and use a portion of that money to provide financial support to your child. This way, you won’t miss out on the opportunity to build your own nest egg for your future needs.

You can leave a bigger inheritance

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If you don’t necessarily need all of your Social Security checks to cover living expenses, taking the funds early allows you to invest some of the money in riskier assets to try to generate bigger returns.

For example, you could invest the funds in stocks, bonds, real estate, and other investments to grow your overall net worth.

When you die, this focused investing could allow you to leave a bigger inheritance for your children. Hopefully, they'll use the funds to create an even better life.

You can pay down your mortgage early

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As you begin counting down toward your retirement date, you might want to pay down some or all of your remaining mortgage balance.

Eliminating your housing payment before calling it quits at work can help you lower retirement costs. Ultimately, this can help you stretch your nest egg funds during retirement.

For those motivated to pay off their mortgage ahead of schedule, taking Social Security benefits early and funneling the money into a payoff plan might be a good option.

How to use Social Security to build a bigger nest egg

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Whether or not you decide to take Social Security early, you can use any extra unspent funds from your benefit to increase the size of your nest egg. Some potential ways to use Social Security money to build a bigger nest egg include:

  • Invest in assets. Buying stocks, bonds, real estate, or mutual funds can help you build an asset-rich portfolio.
  • Create new income streams. Perhaps you could use Social Security funds to start a side hustle and earn extra money.
  • Pay off debt. If you are carrying debt into retirement, consider using Social Security checks to pay it down. Eliminating this source of financial stress might be a top priority for retirees with high-interest debt.
  • Automatically save. If you're risk-averse, you might simply save your Social Security check in a high-yield savings account or CD. When possible, set up your savings strategy so this happens automatically.

Bottom line

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Although many experts recommend delaying filing for Social Security benefits, it can make sense for some retirees to tap into Social Security early.

If you can put the money to good use now and potentially maximize your retirement savings for the future, taking Social Security now could be the right move. If you are unsure of the right strategy, consider discussing the matter with a financial advisor.

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Author Details

Sarah Sharkey

Sarah Sharkey is a personal finance writer who enjoys diving into the details to help readers make more informed decisions. She covers mortgages, insurance, money management, travel, and more.