Seniors

More Retirees Are Taking Social Security Early – But ⁣Is It the ⁢Right Move?

WASHINGTON – A growing ⁤number of ‌Americans are⁢ opting to claim Social Security benefits as‍ soon ​as they become⁣ eligible, despite possibly ​leaving money‍ on the table. While​ claiming⁢ early can provide a crucial financial lifeline, ⁤experts caution⁣ that it’s a decision with long-term implications‍ that requires careful consideration.

The trend comes as many face ‍financial pressures in retirement, including debt, unexpected expenses,​ and concerns about the future solvency of‍ the program. Understanding the pros and cons of claiming early versus delaying benefits is critical for maximizing lifetime ⁣income.

In 2023, the most popular age to begin receiving ⁤Social Security was 66, chosen by 34.1% of new claimants, ‍according to data ​from‌ the Social Security Administration. However,⁤ age ⁢62 – the earliest eligibility age – was a close second, with 23.2% of new beneficiaries starting their benefits than. Age 65 rounded out the ​top three at‍ 11.3%, with all other ages accounting for single-digit percentages of claims.

Several factors are driving the trend toward earlier ⁤claiming. Immediate ​income needs, particularly for debt​ repayment or financial emergencies, are a primary ‌motivator. Health issues and ‌a desire to stop working ⁤also play significant roles. Some retirees claim ‌early to maximize household benefits if one ⁤spouse needs⁣ to retire.

A persistent, though often​ unfounded, fear ⁣that the Social Security program will run out of‍ money also contributes to ⁤the ‌decision. “There ⁤are always people working ⁣and paying into the system,”⁢ says financial planner ​Kimberly Eckels. “There are a lot of things that could be done to fix‍ the ⁢system.”

Claiming benefits before ⁢your full retirement age results⁣ in‍ a permanent reduction in your monthly⁤ payment. ⁣The reduction varies‍ depending on how many⁤ months before full retirement age you claim, ‌but ⁤can‌ be as much ‌as 30% for those ‌claiming⁣ at 62. Conversely, delaying benefits past your full retirement age results in an increase in your⁣ monthly payment, up to ⁤8% per year until‌ age ⁤70.

The government has options‍ to address the long-term financial health of Social ​Security, including increasing the payroll tax that⁢ funds the program, ⁣raising the income threshold for ‌continued tax payments, or increasing the full retirement ⁤age.

“Rash decisions because of fear‌ lead to bad outcomes,” Eckels⁤ cautioned.

Retirees considering when to claim Social‌ Security are⁤ encouraged to carefully evaluate their financial⁤ needs, health status, and life expectancy to make the most informed decision.‍ Resources are available ‍from the Social Security Administration (https://www.ssa.gov/)⁣ and‍ financial advisors to help navigate this complex decision.