Today, half of retirees start claiming their benefits as soon as they become eligible, at age 62.
In fact, the Social Security Administration recently reported that the unprecedented levels of first-time claims has contributed to Social Security payouts exceeding revenue for the first time in history this — six years earlier than previously projected.
Many retirees are unaware of the significant financial disadvantages of claiming benefits at age 62. Widely unknown, individual benefits can rise by one-third, simply by waiting until age 66. And for those who can forgo taking their Social Security until age 70, the monthly benefit rises by 75 percent.
“One of the most important questions that someone planning for retirement must address is what age they will begin claiming their Social Security benefits,” said Insured Retirement Institute (IRI) President and CEO Cathy Weatherford in a statement.
“Millions of Americans may not be aware of the financial advantages most people gain by waiting even a few years to begin receiving their benefits,” she explained. “It is vital that those nearing and planning for retirement carefully determine and review the financial implications of taking their benefit at a specific age. Doing so will help to frame discussions about other ways to plan for guaranteed income for life.”
The client’s situation is a key factor in the timing decision, of course.
Some clients need the funds for living expenses and will collect at the earliest date. But even those with sufficient income might not wait until age 70.