Most Americans’ retirement income comes primarily from Social Security benefits, so employees now should try to increase their potential payout. That necessitates carefully considering several factors, such as when to begin Social Security. One of the key considerations in determining retired worker benefits, according to experts, is age. Workers who are retired who wait until age 70 to file for Social Security may receive up to $1,983 more a month than those who file as soon as possible. Here are some specifics.
Social Security Retirement Benefits Are Affected By Claiming Age
Workers can begin receiving benefits from Social Security at age 62, but they won’t be eligible for their full benefit or main insurance amount (PIA) till they are fully retired (FRA). Employees get less than 100% of their PIA if they file a claim before FRA due to a permanent benefit reduction. However, filing a claim after FRA brings about a permanent benefit boost, so employees get over 100 percent of their PIA. Exactly when benefits begin will determine how much more or less. The Social Security Administration’s calculator can be customized for unique situations. However, all readers ought to be cognizant that postponed retirement credits run out at age 70, making it nearly always unnecessary to begin collecting Social Security benefits earlier. Simply put, doing so is leaving funds on the table.
The wisdom of postponing retirement benefits till age 70 may be questioned by readers. Although claiming benefits later results in a bigger payout, it also results in a lesser number of years of Social Security benefits. Wouldn’t it be preferable to take a smaller reward paid over a longer period? In general, the response is no. The examples that follow demonstrate why it renders more sense to postpone Social Security benefits until age 70. I make use of the same fictitious individual from the previous section, but this time with a monthly payout of either $700 at the age of 62 or $1,240 at the age of 70.
Retirees Should Postpone Social Security Until The Age Of 70
The decision between $700 every month for 19 years or $1,240 each month for 11 years must be made by a 62-year-old guy who has 19 years left to live. Social Security payouts for the first choice are $159,600 over their lifetime, whereas benefits for the second option are $163,680 over their lifetime, or nearly 3% more. With a 22-year remaining life expectancy for the typical 62-year-old woman, she must decide between paying $700 monthly for 22 years or $1,240 every month for 14 years. Social Security benefits accrued throughout a person’s lifetime under the first option total $184,800, whereas benefits accrued under the second option total $208,320, or approximately 13% more. According to statistics, deferring benefits till age 70 would allow the majority of people with average or better life expectancies to maximize their entire life Social Security income.