When should you apply for Social Security? For most retirees, this is the million-dollar question.
because many people need To help them make ends meet, it makes sense to try to get as much money as possible from retirement benefit plans. Your claim options will affect how much money you end up receiving each month and over time, so it’s a very important decision.
The good news is that there is some very clear data telling you when the right time is for most people.
The first thing to know is when you can apply for Social Security. The rules are as follows:
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You can apply for Social Security anytime between age 62 and 70 (technically, you can apply later, but there’s no benefit to doing so).
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If you receive benefits before full retirement age, your benefits will be reduced by up to 30% from your standard benefit.
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If you file a claim after FRA, benefits increase by up to 24% compared to your standard benefits.
Therefore, claiming early means you can receive more payments over your lifetime. Claiming later means you receive smaller payments, but each payment is larger.
In theory, it shouldn’t matter when you file for Social Security. Early filing penalties and late retirement credits that increase or decrease your benefits are hypothesis This allows retirees to receive the same amount of income regardless of whether they claim early or late.
But that is no longer the case. Most people live longer than the life expectancy actuaries considered when creating the system. It’s now clear that most retirees would get more money if they waited until age 70 to get their first check.
Multiple studies show when to file for Social Security if you want to maximize your chances of receiving lifetime benefits.
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According to a 2019 study by United Income, 57% of retirees would have created more wealth if they took a pension at age 70, while only 6.5% of retirees would have created more lifetime wealth if they took a pension before age 64. Early “suboptimal” claims cost retirees $111,000 in lifetime wealth per household.
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According to the National Bureau of Economic Research, 90 percent of workers ages 45 to 62 will have created more wealth by the time they claim a claim at age 70, and delaying a claim can increase the typical worker’s lifetime expenses by 10.4 percent and increase median household wealth by $182,370.
The data shows very clearly that your best bet is to collect Social Security at age 70. Of course, this means you’ll need to work until age 70 or generate enough investment income in your retirement plan to support yourself.
Contributing to your plan and investing wisely throughout your career are the smartest things you can do to ensure you have the funds you need as a retiree.
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Is it better to collect Social Security at 62 or 70? The data is clearer than you think Originally published by The Motley Fool