A recent Social Security report indicated that the strong economy has helped the program, but the trust funds may be depleted within the next decade if no changes are made. Despite this, many Americans have a misconception that benefits will disappear once the trust fund runs out. However, even if the trust funds are depleted, the program will still have revenue from payroll taxes, although benefits may be reduced. A survey found that 75% of adults ages 50 and older believe Social Security will run out in their lifetime.
Data shows that many retirees claim Social Security benefits before reaching the full retirement age, resulting in a benefit cut. The most popular age at which to claim benefits is 62, with 29% of beneficiaries claiming at that age in 2022. However, waiting until the full retirement age, generally between 66 and 67, allows individuals to receive 100% of the benefits they’ve earned. Only 16% of retirees claimed at their full retirement age in 2022, while just 10% waited until age 70 to claim benefits.
The top reason cited for claiming benefits early is a fear that Social Security may run out of money and stop making payments, according to a survey. The second most common reason is the need for immediate financial help. Psychological factors, such as a sense of ownership over earned benefits or an aversion to losing money, may also influence early claiming. However, experts generally recommend delaying claiming retirement benefits, as doing so can result in a significant increase in monthly benefits.
Experts suggest that even delaying benefits by a few months can have a positive impact on retirement security. Waiting until age 70 to claim benefits can significantly increase monthly payments compared to claiming at age 62. Furthermore, Social Security benefits are adjusted annually for inflation, providing an added incentive to delay claiming benefits. While personal circumstances such as a lack of income or poor health may prompt some individuals to claim benefits early, most retirement experts agree on the value of delaying Social Security benefits for a higher overall payout in the long run.
