According to a recent article on Yahoo Finance, only 4% of retirees are claiming Social Security benefits at the most financially optimal time. Rather than waiting to take Social Security benefits at a time that would maximize the money that they receive from the government, these retirees are opting to claim at the earliest time possible – for most, at age 62. Collectively, this means that retirees are losing out on $3.4 trillion in potential income, or $111,000 per household throughout their retirement years!
The age at which you can receive full benefits from Social Security, your Full Retirement Age, is slowly increasing. This age is currently 67 for anyone born in 1960 or later. The earliest age that you can claim social security retirement benefits is age 62, but you’ll receive a reduced benefit. If you don’t draw at age 62, your benefit increases by roughly 8% per year. You can let your benefit grow until age 70; after that it will stay level and only increase by inflation adjustments. For many people, especially those with a long life expectancy, the higher monthly income that comes with delaying benefits until your Full Retirement Age, or to age 70, will usually catch up and exceed the smaller benefit received at age 62.
Of course, deciding when to file for Social Security depends on several factors. Many reasons exist for why retirees want to claim their benefit early – they may need the income now or not trust that social security will be around if they wait. However, studies show that 40% of retirees run out of money in their retirement years. A review of your entire retirement plan, of which Social Security is one piece, is the best way to make sure that you maximize your Social Security benefits and your retirement income.
At Modus Advisors, we first gather all your information to review and analyze your options. We then use our 35 years of experience and industry-leading software, like Social Security Analyzer and Money Guide Pro, to illustrate and analyze different scenarios. We can help you maximize your Social Security benefits and develop a retirement plan that gives you the best chance of meeting all your retirement goals. Give us a call if we can help you map out your retirement plan and increase your chances to draw Social Security at the optimal time!
Client Relationship Manager