When it comes to claiming Social Security retirement benefits, experts agree that it’s generally best to delay claiming. This means waiting until full retirement age, which is typically between age 66 and 67, or even longer until age 70 to receive the highest benefit amount. Despite this advice, many individuals still choose to claim early at age 62 or before their full retirement age. Unfortunately, this results in reduced Social Security benefits for the rest of their lives. To receive the full benefits you’ve earned, it’s crucial to delay claiming until the optimal age.

Reasons for Early Claims

While it is understandable that some people are unable to delay claiming Social Security benefits due to health or financial reasons, many individuals choose to claim early out of concern for the program’s future or to maximize their benefits. Some readers have expressed frustration with the idea of delaying benefits in a recent CNBC article, suggesting that waiting to claim is akin to allowing the government to keep more of your money.

Despite these concerns, experts maintain that waiting to claim Social Security benefits is a beneficial long-term strategy. David Blanchett, head of retirement research at PGIM DC Solutions, emphasizes the safety and security of delaying benefits over time. He suggests that delaying claiming Social Security is one of the safest ways to protect your financial future.

Some individuals argue that investing in the stock market, particularly in an S&P index fund, can yield better returns than delaying Social Security benefits. However, experts caution that while the market may have its ups and downs, Social Security benefits provide a steady and reliable source of income that adjusts for inflation. Research shows that waiting until age 70 to claim benefits can result in a 77% higher benefit amount than claiming at age 62.

When planning for retirement, it’s essential to consider factors like longevity and taxes. Delaying Social Security benefits can result in a more tax-efficient retirement, as withdrawals from traditional retirement accounts may be subject to higher taxes than Social Security benefits. Additionally, delaying benefits can help preserve your standard of living in later years, particularly if you live longer than expected.

Many individuals focus on their “break-even age” when deciding whether to delay or claim early. The break-even age is the point at which they would receive the same amount regardless of when they start claiming benefits. However, experts suggest looking at the bigger picture and considering your entire financial situation when making this decision. Factors like longevity, health care, and financial resources should all play a role in determining the best time to claim Social Security benefits.

While the decision to delay Social Security benefits may not be easy, the long-term benefits of waiting can significantly impact your financial security in retirement. Experts recommend carefully weighing the pros and cons of delaying benefits in order to make the most informed decision for your financial future.

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