Among Social Security retired beneficiaries, nearly half claim their retirement benefits as early as possible and almost everyone claims benefits before their full retirement age. Because Americans are living longer, but retiring earlier (often with a lack of personal retirement savings), the timing of benefits can be crucial to financial well-being in retirement. Claiming benefits before your full retirement age results in permanently reduced benefits. Many researchers argue that delaying benefits is often the best decision economically. In fact, delaying Social Security retirement benefits is now recognized as an important way to enhance retirement security.
Under current law, I won’t be eligible for full benefits for another five years, when I turn sixty-seven. By waiting, I’m guaranteed thirty percent more each month for the rest of my life. Plus, every time there’s a cost-of-living increase, that will be on top of my already thirty percent more money.
There are a number of reasons unrelated to health or financial need that individuals choose to stop working and claim their benefits early. Many people are “burnt out” and “tired of work”. If that’s the case, may I suggest finding sometime new that you might be excited to do with your waking hours or perhaps if you’ve felt the pressure of work, to find something that fills your time, pays you a wage and keeps you active. A recent young retiree of mine left their job this past year to relieve themselves of the pressure and simply took on a new part time job with flexibility and an hourly wage below fifteen dollars an hour, an amount that was way under their old full time salary. I don’t think I’ve ever seen this person so content and happy; and since there’s now a new found joy in life, I expect they will be living long, long into the future.
There’s also a plus to delay your Social Security retirement payout beyond your full retirement age. For those who are able, for each year you wait beyond your full retirement age, until you reach the age of seventy, you can add an additional eight percent to your monthly benefits for each year you delay the start of your government benefits.
The loudest argument I hear from folks as to why they don’t want to delay is that they want to get “their” money before they die. Here’s the deal. It’s not your money. All the money Social Security collected from your paycheck went to your folks and your grandparents. Your money is gone. It was never yours in the first place. You were making payments to others, not yourself.
Everyone's situation is unique, but here are the basics: if you’re comfortable financially without Social Security and you’re in good health and have a family history of good health, the odds are in your favor – Delay, delay, delay. In twenty or thirty years, you’ll thank me and if you die along the way, it won’t make any difference because you can’t take it with you, but because you waited you could have potentially left a larger remaining benefit for your spouse to carry on with their life with less concern about their monthly bills.
