Many Americans are gloomy about the future of Social Security. And they aren’t keen on waiting until age 70 to start collecting it.
More than a quarter of Gen Xers and 4 in 10 boomers said they will start payments as soon as they’re eligible at age 62, even though their monthly benefit may be reduced, according to a new study published by Northwestern Mutual.
Uncertainty about the future of Social Security is haunting Americans as withdrawals from the program exceed contributions. Unless policymakers act, the shortfall could lead to a cut in benefits for retirees and disabled Americans.
That fear is “one factor driving the increasing amount of money workers say they will need to feel financially secure when they retire,” said Keller Lindler, a financial adviser at Northwestern Mutual.
Americans’ magic number for the amount they think they’ll need to “retire comfortably” jumped to $1.46 million, up more than 15% from last year and topping the $1.25 million mark from four years ago.
Will Social Security be there for me?
About a third of Americans said “will Social Security be there when I qualify for it” easily tops their list of burning questions about retirement.
“Social Security remains a top retirement question for Americans — above other major planning challenges such as outliving life savings, planning for long-term care, managing taxes, and budgeting for healthcare,” according to the Northwestern Mutual researchers.
Only three in 10 Gen Xers, whose oldest members are turning 61 this year, and 21% of boomers said they plan to delay receiving Social Security as long as possible to maximize their monthly benefit.
Fewer than half of Gen Xers and boomers said they would start receiving benefits when they hit their full retirement age.
You can take Social Security as early as age 62, but your benefit can be slashed as much as 30% from what it would have been at your full retirement age. For anyone born in 1960 or later, your full retirement age is 67.
If you delay benefits from your full retirement age until age 70, you earn delayed retirement credits. Those come to roughly an 8% increase for each year until you hit 70, when the credits stop accruing.
Deciding when to start Social Security doesn’t always come down to when your monthly payments will be the biggest. There are a slew of factors to consider — the amount of money you have saved in retirement accounts and other assets, such as home equity and outside investment accounts, as well as your health and whether living to your 90s is common in your family.
Importantly, if you lose your job and are nearing retirement, that can impact your choice to claim Social Security.
Have a question about retirement? Personal finances? Anything career-related? Click here to drop Kerry Hannon a note.
Taking Social Security at 62 is trending
Loads of “finfluencers” have been posting videos and memes to justify starting Social Security retirement benefits at age 62 and then investing the money each month in stocks to get that extra juice when markets are rising.
That argument is in stark contrast to what most financial advisers and retirement experts have been urging people to do for years, which is to delay tapping your benefit until age 70 if you can afford to, thereby reaping a larger monthly check for the rest of your life.
The upside of delaying your Social Security until at least your full retirement age — if you don’t need money to live on right now — is that the larger benefit you get by waiting is guaranteed, risk-free from market drops, and comes with an automatic annual inflation adjustment.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky and X.
Sign up for the Mind Your Money newsletter
Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more
Read the latest financial and business news from Yahoo Finance
