When it comes to claiming Social Security benefits, do it when you need it, one expert recently shared with Yahoo Finance Live, even if it means taking benefits early.
There’s an out if you decide you made a mistake.
"There is a neat thing you can do with Social Security and that is you can take it at 62… and you have essentially one year where you can change your mind,” Ken Moraif, senior retirement planner of Retirement Planners of America, said.
But don't feel guilty if you need to turn to Social Security early if you suffered a major financial setback like an unforeseen furlough or unemployment.
“The number one rule: if you need the money you gotta take it,” he said. “If you need the money, and your income is lower than where it was or your prospects are not where they used to be, then take Social Security at 62.”
Think of the money as an “interest and tax-free loan,” so, if your income source rebounds, the money can be paid back with the special Social Security take-back, Moraif said.
“As long as you pay it all back which is not easy for everybody, but if you find that you're gainfully employed again, you can pay it back, and then you can put Social Security back on the back burner and take it when you're 66 or 70,” he said.
The crux of retirement planning centers around risk and trying to predict the unpredictable. That’s why Moraif’s advice is that risk should correspond to your age and when you’re going to need money.
“The amount of risk that is appropriate for you depends on what that time or risk horizon is for you,” he said. “If you need your money now because you've lost your job or your income is lower, then you need to think about how aggressive you should be with your investments.”
Moraif’s recommendation is to adopt more conservative investing practices during times of economic uncertainty or fragile employment situations. Upon a rebound, “then you can go back to being more aggressive because you've got a longer-term horizon.”
“You don't want your money to be at risk in a downturn if you're living on it,” he said. “That's not a good idea.”