One debate that will simply not abate is the issue of when to apply for Social Security Retirement Benefits (RIB). At present, workers can start receiving their monthly checks as early as age 62 or as late as 70. The sooner you go on, the smaller your retirement benefit. Conversely, the longer you wait, the higher your
checks will be. The Goldilocks point is your full retirement age, FRA. This is the exact midpoint between the reduction in RIB and their increase.
Wait If You Can
I have always advocated for waiting as long as possible. You can read my reasoning here. That said, many people, perhaps a majority of retirees, claim RIB the moment they are eligible. The reasons for doing this vary. Two of the most common are 1) what if I die before I reach the so-called break-even point and 2) what if Social Security goes broke and stops paying RIB? To me, both arguments are specious. The benefits of waiting until age 70 are vastly better than any alternative, including starting at FRA.
More Retirees Are Waiting To Claim
A report in the Washington Post suggests that more retirees are getting the idea and waiting to collect RIB. 5% more people eligible for RIB waited until at least
age 65 to start collecting. Among recent retirees, there was an equal 5% who left the workforce but did not put in for RIB. This is very heartening news and suggests that more people are making better financial decisions.
Why The Increase In Waiting To Collect?
But, what accounts for this? Some believe that the availability of other Federal benefits, such as stimulus payments and extended unemployment benefits allowed recent retirees to avoid collecting RIB. Two decidedly more negative explanations could factor in. One is the simple fact that Covid-19 has killed around 175,00 retirement-age Americans. The second bad reason is also related to the pandemic: Social Security shut all of its offices and this has prevented people from applying for RIB.
Stocks, Bonds, And The Wealth Effect
The most probable explanation is the surging stock market. Since the pandemic began, the S&P 500 is up as much as 40%. Many people have looked at their bank accounts and decided that they don't need to work anymore. Not only that, they don't need Social Security retirement benefits to make ends meet.
Talk To Your Financial Advisor Or Accountant
Please don't make such an important financial decision as to when to begin drawing RIB based on this article. Talk to your financial planner and accountant before taking any steps.