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Are Seniors Claiming Social Security Benefits at the Right Time?

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  • JaredS
    2015-02-24 06:58:33 PM
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    This is something I've been reading up on a lot and it seems as if many seniors are claiming their Social Security benefits way too early and are losing out on a lot of money for doing so. Laurence Kotlikoff, an author and Social Security expert, recently wrote a book explaining how to maximize your benefits once you reach retirement age.

    He wrote that if you retired at 62 and began claiming your benefits right away then you are going to wind up losing a lot of money in the long run because you would have a 25% lower monthly payment than if you waited to retire at 66. And he said that if you wait until 70 to retire then you will actually get more money because you are eligible for an 8% 'Delayed Retirement Credit' once you reach age 66 and continue to work.

    So will 70 become the new norm to retire? Should Americans start working longer since we are living a lot longer than we once were? Or is there a better way for the average American to maximize their Social Security benefits?
  • J.K.Logic
    2015-02-24 08:09:01 PM
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    Man, I suppose it makes sense to push the age higher. But 70? .. It's been clear for a while now that to make SS last, folks would have to work into older age brackets. Just seems sad to have to be paying into a system that the only way we can think to fix it right now is to have people work into older and older age requirements. I wonder, how much has life expectancy increased in the last decade? Does it correlate with a 4 year increase to retirement?
  • JaredS
    2015-02-25 04:12:19 PM
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    J.K.Logic Wrote: Man, I suppose it makes sense to push the age higher. But 70? .. It's been clear for a while now that to make SS last, folks would have to work into older age brackets. Just seems sad to have to be paying into a system that the only way we can think to fix it right now is to have people work into older and older age requirements.
    Well, I think some simple adjustments to the cap of taxable income towards Social Security could make it solvent for decades to come, but that's for another discussion.

    I guess what I was trying to suggest is that 62 is just too early to retire if you want to really maximize your benefits. Claiming them too early really drives down the amount of money you will be getting each month. That may be fine for people who are more financially stable, but not so much for those who are not.
    J.K.Logic Wrote: I wonder, how much has life expectancy increased in the last decade? Does it correlate with a 4 year increase to retirement?
    The life expectancy question is interesting. Life expectancy of an average American when Social Security was initially passed was 61, but people couldn't claim Social Security until 62 at the earliest. The average life expectancy has skyrocketed to 79, but the age that someone can claim Social Security has never changed. The age that someone has to reach to receive 'full' benefits has only gone up from 65 in the initial passage of the law to 67 today and it hasn't been revisited since 1960.
  • LivingWanOlderGal
    2016-02-04 02:23:34 PM
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    Yes, average life expectancy has increased, but its an individual choice. If you are in good health, waiting may make sense if you have the resources to do so. But if you are in poor health or just want to retire and need the money, taking the benefits as soon as possible may be best for you.

    The early discount and delayed factors are "actuarially" determined. That means it has the same equivalent value based on the average mortality and interest rates at the time. Because these rates have been determined some time ago when interest rates were higher and mortality was greater, the discounts for early retirement are excessive and the delayed credits are generous. So on average, that is, if you are in average health, you should be better off waiting if you are financially able to do so.

  • Richard1022
    2016-02-09 04:51:19 PM
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    LivingWanOlderGal Wrote: So on average, that is, if you are in average health, you should be better off waiting if you are financially able to do so.

    That's what my parents are doing, but they are financially able to do so. I just feel bad for those who aren't. Seniors who have serious health issues and can't continue to work, but aren't financially stable, are the people I worry most about.

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