Why You Should Wait To Start Collecting Social Security

Most people are aware that their monthly income increases the longer they wait to begin receiving Social Security retirement benefits. However, despite having the option to receive up to 77 percent more by postponing their claim until age 70, most Americans choose to begin receiving benefits much earlier.

A recent survey states that 86 percent of older Americans who have not yet retired know that delaying Social Security will result in more considerable benefits. Still, only 11 percent indicate they want to wait until 70 years old before taking advantage of it. Although it’s not ideal from the perspective of retirement experts and financial counselors, older Americans frequently leave Social Security payments on the table.

Even though the minimum claiming age of 62 is the most common one. It results in recipients receiving up to 30% less than the full retirement benefit based on their lifetime earnings history. About 30% of employees begin receiving Social Security at that age. Approximately 60% of people file claims before reaching full retirement age, which is between 66 and 67, depending on the year of birth, and only 10% wait until they are 70 to lock in their maximum payout.

Working Americans frequently worry that after contributing to Social Security for years, they may go bankrupt by the time they are eligible to receive benefits. In the Schroders study, nearly a third of participants said they wouldn’t wait until they were 70 because they were worried the program would run out of money or cease paying benefits.

Most Americans pay payroll taxes on their earnings, which fund Social Security. As long as those taxes are continued to be collected, it won’t run out of money.

If Congress doesn’t take action to strengthen Social Security’s finances, payouts may need to be reduced soon. The program pays out more in benefits each year than it receives in revenue, making up the difference by drawing on cash reserves in its trust funds after years of operating in a surplus. According to the trustees of Social Security’s most recent predictions, such funds will be depleted by 2035.

Making ends meet has become more difficult due to inflation, which has reached a 40-year high. Many older Americans struggle financially due to rising prices and limited cash flow. Increasing Social Security benefits can seem like the most practical answer in this situation.

Delaying Social Security will allow you to receive more significant benefits down the road and provides ongoing inflation protection through yearly cost-of-living adjustments, or COLAs, unlike other sources of retirement income. Suppose you take additional measures to deal with rising prices today, such as using different income sources or reducing your spending. In that case, you can delay Social Security and get considerable benefits in the future.

Many people are concerned that if they wait to file their claim, they will pass away before receiving the money they contributed to the Social Security system or that they won’t be able to use the funds while they are still healthy. For someone with a chronic condition or a family history of disease that could presage a shortened life expectancy, that is a more pressing problem.

Knowing when to file for benefits should consider your health and family history. However, suppose you take good care of yourself and maintain good health. In that case, you have a decent chance of surviving well past retirement and spending many years receiving the more significant benefit of waiting. The National Center for Health Statistics estimates that the average American may expect to live for nearly 20 additional years after turning 65.