Experts have been saying for years that senior citizens should hold off on collecting Social Security for as long as possible. This advice is now changing, with many experts advising on an earlier start date.
Full retirement age is the earliest age that a person can receive full Social Security benefits. This age has been increasing each year based on a law passed by Congress in 1983. As of right now, if you turn 62 this year, your full retirement age is 66 years and 2 months.
You can now collect Social Security benefits at 62, although you will face reductions. The longer you wait to collect your benefits, the more your benefits will increase as you get older. For example, if you collect benefits at age 65, your benefits will be permanently less than if you wait until you reach age 70 to collect. Social Security benefits increase by 2/3 of 1% each month until you reach age 70.
According to the Social Security Administration, the average American senior collects social security benefits at age 64.5. This indicates that many Americans are opting to collect the benefits far earlier and are, therefore, reducing their monthly income.
Risks Associated With Collecting Social Security Benefits Early
As already mentioned, taking benefits earlier means you lose that annual increase for the rest of your life. This amounts to about a 26% reduction. Your children and spouse may also be affected by the Social Security benefits (SSBs) that you are receiving.
Benefits of Collecting Social Security Benefits Early
On the flip side, there seem far more benefits associated with collecting SSBs earlier, rather than later in life. The most obvious reason is that if you have no other form of income and cannot find a job, SSBs may be your only way to make ends meet. Even if you have a job, if it is not providing the enjoyment you wish to be experiencing in your golden years, then collecting SSBs can enhance these years of your life with less stress.
Finally, while perhaps a little morbid, one certainty of life is death. It is realistic to consider mortality rates when determining when to collect SSBs. According to the Social Security Administration, a 62-year-old woman can expect to live another 23 years on average, while men can expect to live another 20 years. Would you rather take a little less money and collect longer, or wait and collect more money for a shorter period ?
Why Are More Seniors Choosing to Collect Earlier?
According to a survey by Merrill Lynch, senior citizens are collecting SSBs earlier in life because :
- More freedom and flexibility
- Better emotional well-being
- Greater time for fun and experiences
- More time for family
While some people collect SSBs earlier out of necessity, many others are collecting earlier to enjoy life while they still have a reasonably good quality of life. Before deciding when you should collect your benefits, it is best to talk with an experienced elder law attorney to see your options .
References: When Is a Good Time to Start Receiving Social Security Benefits? (2/13/2017) https://blog.ssa.gov/when-is-a-good-time-to-start-receiving-social-security-benefits/
Merrill Lynch Study Finds New Retirement Realities Usher in Opportunities and Challenges (2/15/2017) https://newsroom.bankofamerica.com/press-releases/global-wealth-and-investment-management/merrill-lynch-study-finds-new-retirement-real