I originally planned to claim Social Security at 62 when I first became eligible.
I changed my mind because I want to work longer and would end up temporarily losing benefits anyway.
Data on the benefits of delayed filing also convinced me that waiting is the way to go.
Have You read The New Report Shaking Up Retirement Plans? Americans are answering three questions and many are realizing they can retire earlier than expected.
Have You read The New Report Shaking Up Retirement Plans? Americans are answering three questions and many are realizing they can retire earlier than expected.
For a long time, my plan was to claim Social Security at the age of 62. I wanted to start my benefits then because that was the age at which I first became eligible for them.
I figured that I would start getting the money ASAP because, like many people, I’m worried about Social Security’s trust fund running dry. I also have concerns that Social Security benefits are losing buying power over time because they are not being appropriately adjusted to account for inflation.
However, I changed my mind as I started to learn more about how Social Security works. Here are the biggest factors that convinced me a delayed claim would end up being better for me in the end.
As I started to research more about how Social Security works, I realized a few key things that prompted me to decide I’d actually prefer to wait at least until 67, and probably until 70, to start my monthly checks. Here’s what I found out:
The threat of Social Security cuts isn’t as dire as it seems: The risk of benefits running out was a major concern, but I realize now that the threat of this sounds scarier than the reality. The Social Security Administration is always going to be able to pay out benefits from current revenue, so even if the trust fund runs dry, the system could still pay out somewhere between 75% to 80% of promised benefits. While this isn’t great, it also doesn’t mean getting $0. And, Congress will probably take action to fix the issues before that happens anyway, as Social Security benefit cuts would be enormously unpopular.
Odds of more lifetime income are better if you delay: Studies have repeatedly shown that claiming at 70 maximizes your odds of getting the most lifetime benefits. People are simply living longer than they did when the system was designed, which means the early filing penalties and delayed retirement credits that were supposed to equalize out lifetime benefits for early and late claimers don’t really do that anymore. Now, around 90% of people who wait until 70 get more lifetime benefits. I figure, why not play the odds and wait to see if I end up being one of them?
I want to work past 62: Another big factor for me in deciding when to claim Social Security is the fact that I enjoy my job, and I’d ideally like to work well beyond age 62. Of course, factors beyond my control could impact my ability to do that, but the ideal goal will be to keep working as long as I can. This could end up being an issue, though, if I started Social Security at 62 because I’d probably earn more than the allowable limits and end up temporarily forfeiting my benefits anyway.
Story Continues
For all of these reasons, it just makes sense for me to wait longer to claim benefits. Plus, even though Social Security isn’t perfectly keeping pace with inflation, Cost of Living Adjustments do result in benefits going up over time, and benefits are guaranteed to last for life. So, it makes sense to try to maximize the income I’m guaranteed to get until I die.
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Waiting to claim Social Security makes good sense for me, but it may not make sense for everyone. You’ll need to consider factors like your health status, your ability to work into retirement, your savings, and your goals for the future. A financial advisor can help you decide what makes the most sense so you end up making the best decision for your specific needs.
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Many are even learning they can retire earlier than expected.
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