Aj_watt | Electronic+ | Getty Images
A recent Social Security report showed that a strong economy is helping the program.
Still, if changes aren’t made soon, Social Security’s trust fund could be depleted within the next decade.
Many Americans have a mistake Worry that benefits will disappear.
“The biggest myth about Social Security is that when the trust funds run out, the program disappears,” said Emerson Sprick, deputy director of the Economic Policy Project at the Bipartisan Policy Center.
Even if Social Security’s trust fund is depleted, the program will still receive revenue from payroll taxes. Benefits will still be paid, although they may be reduced.
However, a 2023 survey from the National Retirement Institute found that 75% of adults age 50 and older believe Social Security will run out during their lifetime.
When people apply for Social Security
Additionally, data shows that retirees typically do not wait until they are able to receive 100% of their benefits.
The most popular age to receive benefits is 62, with 29% of beneficiaries claiming early in 2022, according to a report by the Bipartisan Policy Center based on Social Security Administration data.
But these beneficiaries receive about a 30% benefit cut because they did not wait until full retirement age, when they would receive 100% of their benefits. Full retirement age is generally between 66 and 67 years old, depending on the individual’s date of birth.
The majority of beneficiaries (62%) received their pension before full retirement age in 2022.
More from Personal Finance:
As Social Security faces bankruptcy, here’s what to watch
Why Warren Buffett makes most of his wealth after turning 65
Big changes are coming to the advice regarding 401(k) extensions.that’s why
Only 16% of retirees claim to have reached full retirement age.
For each time a beneficiary waits beyond full retirement age until age 70, their benefits will increase by 8%. But data shows that only 10% of recipients wait until age 70 to collect.
Why people claim early
A 2023 Schroders survey found that the top reason people cited for claiming benefits early was fear that Social Security might run out of money and stop payments.
The second most common reason, according to the survey, is that they need money.
Recent research by Professors Suzanne Shu of Cornell University’s Johnson School of Business and John Payne of Duke University’s Fuqua School of Business suggests that psychological factors may also prompt early filing of claims.
Research has found that employees are likely to feel a sense of ownership over the benefits they receive and therefore want to receive them as quickly as possible.
Or they may be motivated by an aversion to losing money.
Increase your benefits every month
Still, experts say it’s generally better to delay taking retirement benefits.
“Everyone should know that if you’re in If you claim it before age 70, you will be penalized.
According to an analysis by the Bipartisan Policy Center, someone who is eligible to receive the full retirement-age benefit of $2,000 per month at age 67 might receive $1,400 per month if taken at age 62. Wait until age 70 to receive $2,480 per month.
While delays often last years, waiting even just a few months can help.
Delays of six, 12 or 18 months are “very helpful retirement security moves you can take,” said Sprick of the Bipartisan Policy Center. That still means retiring at 62, 63 or 64.
“Look at it this way, over a few months, you can help some people who really wouldn’t make it through a few years,” Sprick said.
Retirement experts agree on the value of delaying Social Security benefits — unless you need to start benefits earlier due to personal reasons such as lack of income or poor health.
Social Security benefits adjust annually for inflation, a feature generally unmatched by annuities or retirement benefits.
These cost-of-living adjustments are another reason to wait to receive benefits, since the annual increases are higher when benefit amounts are larger.
