Social Security

THERE’S A TREND TOWARD claiming Social Security retirement benefits later. Still, the most popular age to take benefits remains 62, the youngest possible age. In 2022, among those starting benefits, 26% of men and 28% of women were 62. (This calculation excludes those on Social Security disability benefits who were automatically converted over to retirement benefits.) If these 62-year-olds were in poor health, claiming benefits right away might have been the right choice. But many were likely making a mistake.

You can claim Social Security as early as age 62 or as late as age 70. The longer you delay, the larger your benefit will be. The amount of the increase will depend on the year you were born and hence your full Social Security retirement age. But waiting carries a cost, because you don’t get benefits during the intervening years. The big risk: You die early in retirement and get nothing back after a lifetime of paying Social Security payroll taxes. Still, delaying Social Security will make sense for many retirees for three reasons:

  • It provides insurance against living a surprisingly long time—and the later you claim benefits, the more insurance you’ll have. Remember, Social Security payments are stepped up every year with inflation and paid for as long as you live. By delaying, you buy yourself more of this income, which could prove invaluable if you live longer than expected and run through your other savings.
  • It can provide spousal benefits to your husband or wife, who may also want to delay, thereby getting more income.
  • It can provide a survivor benefit to your spouse. By waiting, you can ensure more income for your husband or wife after your death. In fact, it may be worth delaying Social Security even if you’re in poor health, because your benefit could live on after your death.

Our Humble Opinion: Social Security is such a wonderful source of retirement income that most folks should delay benefits, so they get a larger monthly check. Retirement’s big financial risk isn’t dying young, with scant money collected from Social Security. Rather, the big risk is living so long that you deplete your savings—at which point a fat Social Security check could be your financial salvation.

Next: Benefits Eligibility

Previous: Varying Spending

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