More Retirees Are Taking Social Security Early – But โฃIs It the โขRight Move?
WASHINGTON – A growing โคnumber of โAmericans areโข opting to claim Social Security benefits asโ soon โas they becomeโฃ eligible, despite possibly โleaving moneyโ on the table. Whileโ claimingโข early can provide a crucial financial lifeline, โคexperts cautionโฃ that it’s a decision with long-term implicationsโ that requires careful consideration.
The trend comes as many face โfinancial pressures in retirement, including debt, unexpected expenses,โ and concerns about the future solvency ofโ the program. Understanding the pros and cons of claiming early versus delaying benefits is critical for maximizing lifetime โฃincome.
In 2023, the most popular age to begin receiving โคSocial Security was 66, chosen by 34.1% of new claimants, โaccording to data โfromโ the Social Security Administration. However,โค age โข62 – the earliest eligibility age – was a close second, with 23.2% of new beneficiaries starting their benefits than. Age 65 rounded out the โtop three atโ 11.3%, with all other ages accounting for single-digit percentages of claims.
Several factors are driving the trend toward earlier โคclaiming. Immediate โincome needs, particularly for debtโ repayment or financial emergencies, are a primary โmotivator. Health issues and โa desire to stop working โคalso play significant roles. Some retirees claim โearly to maximize household benefits if one โคspouse needsโฃ to retire.
A persistent, though oftenโ unfounded, fear โฃthat the Social Security program will run out ofโ money also contributes to โคthe โdecision. “There โคare always people working โฃand paying into the system,”โข says financial planner โKimberly Eckels. “There are a lot of things that could be done to fixโ the โขsystem.”
Claiming benefits before โขyour full retirement age resultsโฃ inโ a permanent reduction in your monthlyโค payment. โฃThe reduction variesโ depending on how manyโค months before full retirement age you claim, โbut โคcanโ be as much โas 30% for those โclaimingโฃ at 62. Conversely, delaying benefits past your full retirement age results in an increase in yourโฃ monthly payment, up to โค8% per year untilโ age โค70.
The government has optionsโ to address the long-term financial health of Social โSecurity, including increasing the payroll tax thatโข funds the program, โฃraising the income threshold for โcontinued tax payments, or increasing the full retirement โคage.
“Rash decisions because of fearโ lead to bad outcomes,” Eckelsโค cautioned.
Retirees considering when to claim Socialโ Security areโค encouraged to carefully evaluate their financialโค needs, health status, and life expectancy to make the most informed decision.โ Resources are available โfrom the Social Security Administration (https://www.ssa.gov/)โฃ andโ financial advisors to help navigate this complex decision.