A deeper look at the age at which most Social Security retirees choose to collect their benefits reveals some intriguing figures.
In recent years, there has been a noticeable shift in the age at which retirees are claiming their Social Security benefits. While many are still opting to start receiving benefits as early as 62, a growing trend suggests that a delayed claiming strategy could be more beneficial for retirees in the long run.
According to the Social Security Administration (SSA), about 29.3% of workers are choosing to start their benefits at 62, the most common age for new retirees. However, studies indicate a longer-term trend toward delaying claims to later ages, which is somewhat underestimated by annual claims data.
For instance, despite the surge in early claims around age 62, research using cohort data shows that over longer periods, more people are working longer and delaying Social Security claiming. This delayed claiming tends to increase monthly benefits and overall retirement security for many.
The apparent contradiction arises because annual SSA claims data can underestimate delayed claiming trends. Larger numbers of people turning 62 inflate the share of early claimants in any given year, masking cohort-level behavior that shows more delaying overall.
If lawmakers don't make changes to Social Security to shore up the program's finances, it will need to reduce benefits by roughly 17% by 2035. This potential reduction emphasizes the importance of understanding the benefits of delayed claiming.
Various studies have shown that the majority of retirees are best off waiting to receive the maximum benefit they're entitled to at age 70. By delaying their claim, a retiree could boost their monthly check by up to 24% if their Full Retirement Age (FRA) is 67. Delaying claiming benefits beyond FRA increases the benefits, up to a cap at age 70.
Moreover, for retirees who live beyond the average life expectancy, a delayed claim will net them more in lifetime benefits than an early one. This is because the benefits continue to increase until age 70, while an early claim results in a reduction of the Primary Insurance Amount (PIA).
The trend of delayed claiming is particularly noticeable among women. The percentage of retirees claiming at 62 declined from 34% in 2019 to 27% in 2023. Similarly, for men, the percentage declined from 31% in 2019 to 26% in 2023.
It's essential to note that retirees have the flexibility to start claiming Social Security benefits as early as age 62 or as late as age 70. The Center for Retirement Research suggests that more people in the U.S. have been turning 62 in recent years than other age groups, potentially skewing the numbers.
In conclusion, while many retirees still claim Social Security benefits early at 62, the longer-term trend is toward later claiming and extended working lives. Retirees must evaluate their personal circumstances to determine their optimal age to claim Social Security benefits, considering factors such as their life expectancy, financial needs, and the potential changes to the program.
In the evolution of personal finance for retirees, a growing trend suggests that a delayed claiming strategy could offer increased monthly benefits and overall retirement security, contrary to the staggering number of retirees claiming as early as 62. Moreover, many studies advocate that for those with longer life expectancies, a delayed claim can provide more substantial lifetime benefits as compared to an early claim.
