Phillip Q. Shrotman

 

How Much Does Claiming Social Security Early Cost You?

 

Retirees will lose an average of $111,000 in income per household because they took Social Security benefits too early into their retirement, rather than draw down on their own savings first, according to a new study released Friday from United Income, a technology wealth management company. At the end of their lives, they will have $68,000 less in estimated wealth because they claimed at the wrong age.

which, for 83.4% of them, was age 67 or older. The best age depends on a host of factors, including life expectancy, other income sources, future costs in retirement and if you're married or still working. "Overall, only 4% of retirees took Social Security at the financially optimal age, which, for 83.4% of them, was age 67 or older. The best age depends on a host of factors, including life expectancy, other income sources, future costs in retirement and if you're married or still working.

Simply claiming Social Security at the best age could also make retirement a reality for many seniors who may not be able to afford it otherwise, the study found. The findings come as many Americans struggle to plan and save adequately for retirement.

Think tank Brookings Institution where he researched consumer finance in relation to poverty. “This speaks right to the core of why this program was created in the first place. “For those who are low income, the impact is greater,” says Matt Fellowes, CEO of United Income and former fellow at the think tank Brookings Institution where he researched consumer finance in relation to poverty. “This speaks right to the core of why this program was created in the first place.”

When to take Social Security? &Social Security makes up about a third of the annual income that retirees receive, according to the Social Security Administration. The amount retirees receive each month increases if they wait longer to enroll in the government administered retirement program.

––About 57% of retirees would get the biggest boost financially if they waited to take benefits until 70 – the age that only 4% of retirees currently claim, the study found. Only 6.5% of retirees would be better off financially if they claimed before turning 64 –when seven in 10 retirees currently claim. One in four of those at risk of not affording retirement or having enough income to cover their expected costs would have better chance of retiring if they claimed Social Security at the optimal age. Poverty among elderly people also would be cut by almost half if all retirees claimed at the best time, the study found.

“It’s a really big penalty those folks on the edge are making,” Fellowes says.

The reason many retirees don’t wait is simply fear, says Fellowes. Older Americans become more pessimistic about the economy and stock market, and it makes them anxious to draw down on the nut they accumulated over decades in their retirement accounts. Instead, they claim Social Security early.

How to claim Social Security at best time Another obstacle is calculating the optimal age. Many factors contribute to this, so the right answer varies across and, even within, households, the study found.

For instance, 71% of primary wage earners have the best chance of affording retirement if they enroll in Social Security at 70. But that percentage falls by half for the spouses of the breadwinner.

He recommends using these three rules to help guide you in getting more, if not the optimal amount – from Social Security: Fortunately, there are general rules of thumb that will get you close to your best claim age, Fellowes says. He recommends using these three rules to help guide you in getting more – if not the optimal amount – from Social Security:

Nearly no one is better off claiming before 65.

Nearly everyone is better off claiming between 67 and 70.

If you’re married, the person who earned the most should wait until 69 or 70. The person who made less can claim at 66 or 67.

Outside of these rules, it’s basically impossible to do on your own,” he says. “It’s incredibly hard to make right decision.”

PQS

 

 

 

This article originally appeared on USA TODAY: Social Security: Claim too early and lose $100,000 in retirement