Social Security income is a major component of most retirees’ foundational income. Gallup, a national pollster, has conducted surveys for more than 20 years. Although the average benefit cheque that retired workers received in June was tiny at $1,837.29 (about $22,000 when annualized), this payout aids between 80% & 90% of the retired people make ends meet.
Retired workers who meet the eligibility requirements must maximize their Social Security benefits in order to maintain low rates of elder poverty. This entails being aware of how retirement benefits are determined each month and choosing wisely when to file for benefits.
Social Security At Age 62, 67 or 70
It is advised to have patience even though benefits from Social Security can start at age 62. Up until the age of 69, a qualified worker’s monthly payout may increase by up to 8% for each year they postpone receiving their benefits.
However, there isn’t a set rule for when to start receiving Social Security benefits. Ages 62, 67 (the FRA for the majority of future retirees), and 70 are probably going to be popular choices for many of them, and each has advantages and disadvantages of its own.
Age 62: The ability to get your Social Security income as soon as feasible is the main benefit of filing for benefits early. However, it entails settling for a permanent 30% drop in your monthly payout. Additionally, if a beneficiary files a claim after age 62, they may be subject to the retired earnings test, which might result in the SSA withholding some or all of their benefits.
Age 67: Seniors born in 1960 or after can choose to collect their complete payout by claiming benefits at age 67, which is a middle-ground option. However, retirees will need to be patient for five years, and if they survive well into their 80s, some of them may end up leaving funds on the table.
Age 70: Taking benefits at age 70 has the obvious benefit of increasing your Social Security payment by 24% to 32% over what you would have gotten at full retirement age. On the other hand, it means forfeiting the opportunity to receive Social Security benefits for eight years. In addition, there’s a chance that you won’t live to be 80 years old, in which case your lifetime income will most likely be smaller than if you filed early.
Best Age To Claim Your Benefits
The University of Michigan’s Health and Retirement research was used to analyze the retired-worker claiming decisions of almost 20,000 respondents in research published in 2019 by financial planning company United Income as well as online investment management.
The aim of this investigation was to ascertain whether the approximately 20,000 retirees had chosen their claim strategy wisely. According to United Income, the “optimal” choice was the one that gave the claimant the maximum lifetime payments.
Keep in mind that the maximum lifetime benefit might not always equate to the maximum monthly benefit. According to United Income, there was nearly a perfect inverse relationship between optimal claiming decisions and claiming age.
Stated differently, relatively few claims were optimal, and seniors frequently left sizable amounts of their Social Security earnings on the table. For example, just 8% of the approximately 20,000 claims received at the ages of 62, 63 or 64 would have been ideal.
Despite the allure of obtaining an additional revenue stream by the age of sixty-two, a survey conducted by United Income reveals that a small percentage of early claimers made a wise decision.
When it comes to obtaining Social Security benefits, there is no ideal guide. Your choice will probably include a number of criteria, including your financial situation, marital status, and general health.
Although there are good reasons to start receiving benefits early, you should be aware that if you wait to file, your chances of receiving a larger lifetime payout from Social Security are higher statistically.