According to a 2023 Nationwide Retirement Institute survey, 75% of adults aged 50 and up believe social security will run out in their lifetime.
Why Do People Claim Social Security Early?
Many Americans worry that social security benefits will not be available to them after a specific time period.
Emerson Sprick from the Bipartisan Policy Center said that one of the biggest myths surrounding social security is that once the trust fund runs out, the program will go away. However, it is important to note that even if Social Security’s trust funds run out, the program will still receive payroll taxes, so benefits will continue. But it might be at lower levels.
According to a 2023 Schroders survey, people claimed Social Security early mainly because they feared the money would run out. The second reason was their need for money.
According to research by professors Suzanne Shu and John Payne, psychological factors may also lead them to have early Social Security claims.
Additionally, workers might feel a sense of ownership over the benefits they have earned. Therefore, the research found that this might push them to want to claim them as soon as possible. On the other hand, it might also be due to their not wanting to lose any money.
When do People Claim Social Security?
Data shows that retired people often do not wait until they can receive their full Social Security benefits. The most popular age to claim Social Security is 62, with 29% of beneficiaries doing so in 2022, according to a Bipartisan Policy Center report.
Beneficiaries who claim Social Security at age 62 take about a 30% benefit cut for not waiting until their full retirement age, which is between 66 and 67.
In 2022, 62% of beneficiaries claimed Social Security before their full retirement age, while only 16% of retirees claimed it at their full retirement age.
Beneficiaries who wait until age 70 receive an 8% benefit increase for each year past their full retirement age, but only 10% of claimants waited until 70.
How to Get More Social Security Benefits?
Waiting to claim retirement benefits can increase your benefits over time, and experts recommend delaying them.
Teresa Ghilarducci, a professor at The New School for Social Research, has said that there is a penalty if you collect retirement benefits before 70.
Delaying retirement benefits can significantly increase monthly payouts. For example, if someone is eligible for a $2,000 monthly benefit at 67 claims at 62, they might receive only $1,400 monthly. However, waiting until 70 could mean $2,480 monthly.
Even delaying by just a few months can make a difference.
According to Sprick from the Bipartisan Policy Center, delaying retirement benefits by increments like 6, 12, or 18 months can significantly increase retirement security. This approach allows for retirement at ages 62, 63, or 64. It can be helpful for those who cannot stretch it by years.
Retirement experts talked about the benefits of delaying Social Security benefits, except in cases of urgent financial need or poor health. Social Security benefits are adjusted yearly for inflation, a perk that is not always offered by annuities or pensions. Waiting to claim benefits means higher adjustments for inflation over time, particularly for larger benefit amounts, increasing their value.
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