Most people do not regret taking Social Security early – The Motley Fool

When it comes to claiming social security, patience can be a virtue. Although you can start claiming benefits as early as age 62, you will receive slightly larger checks each month. And if you wait beyond the retirement age, the age at which you receive 100% of the benefits to which you are theoretically entitled, you will receive an extra boost, up to 32% more by check.

Despite the benefits of waiting, 62 remains the most popular age to start claiming social security benefits. In fact, 48% of women and 42% of men began receiving benefits at age 62, according to a study by the Center for Retirement Research at Boston College, and 64% of women and 53% of men FRA.

Source of the image: Getty Images.

Since it is possible to receive this increase in profits in the meantime, it is logical to assume that most people who have claimed early may eventually regret this decision, as they may miss larger checks.

However, according to a new article Journal of Aging StudiesMost social security recipients who claimed benefits earlier do not regret their decision, even though they know they could have received larger checks if they had waited.

The benefits of claiming early

According to the article, the researchers studied a focus group made up of older men and women to determine why they came forward early and if they were satisfied with their decision. They found that the majority of study participants thought they had "made the right decision based on their circumstances at the time," although some of them admitted that they would have waited longer before to have a different financial situation.

For some people, claiming benefits sooner is not an option, but a necessity. Whether you lose your job or health problems require you to retire earlier, it can be difficult to make ends meet. If you are struggling to pay the bills, you may have no choice but to apply for Social Security benefits as soon as possible to start generating income.

Sometimes, however, pretending early can be smart – if you are strategic about it. For example, if you have reason to believe that you may not be living for many more decades (for example, if you know that your health problems will shorten your life expectancy), it would be wise to pretend early.

Theoretically, the lifetime amount you receive in benefits should be the same regardless of when you claim it. If you claim earlier, you will receive more (but smaller) checks, and if you wait, you will receive fewer (but larger) checks. Your "break-even point" is then the age at which your lifetime total earnings are equal, regardless of whether you have claimed early or deferred claims for a few years.

For example, say that the total amount of your benefits (or the amount you will theoretically receive if you wait for your FRA claim) is $ 1,300 per month, or $ 15,600 per year. If your FRA is 67, your benefits will be reduced by 30% if you ask at age 62, which leaves you $ 910 a month ($ 10,920 a year). If you wait until age 70, you will receive a 24% bonus to compensate for the time you were not receiving benefits, and your monthly check would be $ 1,612 ($ 19,344 per year). Here are what your lifetime benefits would look like:

Calculations by author. * Includes first year of benefits.

While you will end up receiving more money over time while waiting to claim, you will have to live up to age 80 before receiving lifetime benefits by claiming your lifetime benefits at age 67 or 70. will not live as long, it might be smart to claim early and make the most of your money while you can.

When it is a good idea to wait

That said, it is sometimes better to wait a few years than to claim benefits as soon as possible. If you are lucky enough to be able to choose when you are claiming (which means you do not have to claim early because of financial stress), this increase in profits can go a long way towards covering your bills. expenses start to climb.

For example, if you plan to live 80 years or older, these larger checks can make all the difference for expenses such as long-term care and health care. Of course, you can not predict exactly how long you will live, but it's always a good idea to be ready for anything – a quarter of people who are 65 today can hope for live more than 90 years, according to the Social Security Administration. and one in ten is expected to exceed 95.

In addition, because the increase in benefits you receive in the meantime is permanent, you will receive larger checks. for life. So, if you live up to 90 (or even over 100), you will continue to enjoy these benefits every month for the rest of your life. This money will be particularly useful as you get older, as your personal retirement savings will probably be rare (or could have reached dry years) by the time you reach that age.

It is also wise to defer benefit claims as long as possible if your pension fund is not as strong as you would have liked, as this extra cash can compensate for what you have not not in your own savings. In addition, if you continue to work a few more years, not only do you contribute more to your pension fund, but you do not lose your savings as quickly as if you had retired and claimed benefits at age 62.

If you do not absolutely need to apply for benefits sooner, it is often best to wait, especially if you do not have serious health problems or other reasons to believe that you will not spend more than ten years in retirement. . However, if your options are limited, the good news is that you will probably not experience years of regret if you claim early.