Early Benefit Claiming: Only 10% Waiting Until 70 for Maximum Social Security Benefits

Early-benefit-claiming-only-10%-waiting-70-maximum-social-security-benefit

As retirement nears, a pivotal question arises: when should you start receiving Social Security benefits? Surprisingly, the 2023 Schroders US Retirement Survey reveals that just 10% of non-retired Americans aged 60 to 65 plan to wait until age 70 for larger benefits. This statistic unveils intricate financial concerns and misconceptions about retirement planning.

The heart of the matter lies in the substantial benefit increase achievable through waiting. Delaying Social Security claims until after the full retirement age (67 for post-1960 births) offers an 8% monthly payment boost for each year deferred, up to age 70. Over 20 years or more, this accumulates into considerable additional income.

Still, the survey unveils a striking 40% of employed respondents intending to claim benefits between ages 62 and 65, foregoing full benefits. Despite awareness of the benefits of waiting, factors beyond finances guide these choices. 

Compelling factors contributing to these choices emerge from the survey. A notable 44% express concerns over Social Security’s stability, opting for early benefits to secure maximum funds. Additionally, 36% cite imminent financial needs, accelerating benefit claims.

Deb Boyden, head of US  Defined Contribution at Schroders, underscores the gravity of these trends, noting a “crisis of confidence” in the system. Fear-driven decisions result in sacrificing higher benefits that could enrich retirement. Boyden highlights the need for personal financial planning as people often claim benefits early, missing out on potential growth.

Read Also: Social Security Survivor Benefits Eligibility: What You Need to Know

Planning for Retirement Security

Early-benefit-claiming-only-10%-waiting-70-maximum-social-security-benefit
As retirement nears, a pivotal question arises: when should you start receiving Social Security benefits?

Social Security’s future concerns arise from predictions of the Old-Age & Survivors Insurance Trust Fund (OASI) facing deficits by 2033. Solutions vary, with proposed actions ranging from raising the payroll tax limit to altering benefit eligibility age. 

Respondents’ retirement income aspirations average $4,940 per month. Millennials aim slightly higher at $5,135, while those nearing 60-65 seek $4,855. In contrast, current retirees average $4,710 per month, including Social Security. Notably, 37% claim less than $2,500 monthly, underlining widespread financial challenges.

Preparation proves crucial for a comfortable retirement. The survey highlights that active retirement planning leads to higher average incomes. Those with advisors average $5,075, while formal planners boast $5,810, compared to $3,000 for those without plans.

In projecting retirement income, assessment factors in expenses, debts, housing, and lifestyle. While Social Security aids, personal savings and investments are essential. The survey underscores informed choices and rigorous planning for a secure retirement. Maximizing Social Security benefits alongside personal strategies readies individuals for a fulfilling future.

Read Also: Modest 3% Boost in Social Security COLA Set for 2024: Retirees to Gain Less than $54

Source: Yahoo Finance

 

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