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Many Americans assume that waiting until full retirement age (FRA) maximizes their Social Security payouts. However, Financial Advisor Dan Moisand stresses that playing the waiting game may not always be the sensible choice. He explains in this article:
“It may seem like common knowledge that delaying the claiming of Social Security retirement benefits is an excellent strategy for many families. The financial planning profession may understand this, but it is certainly not true for the general public.
The Social Security Administration’s Annual Statistical Supplement 2013 reveals that the most popular age to start retirement benefits is still 62, the earliest age one is eligible to receive retirement benefits. According to the SSA, 37.5 percent of men and 42.4 percent of women claimed at age 62.
It’s true that waiting it out until your full retirement age can boost the final payouts, as most financial advisors and accredited social security lawyers will attest. However, two key factors can play a role in the decision to cash in early: physical health and life expectancy.
The average life expectancy of a typical American is 79.8 years old; 77.4 for men, and 82.2 for women. Based on these statistics alone, Americans might be encouraged to hold out until age 70 when benefits are compounded. In addition, many find the financial landscape of Social Security too complex to figure out. However, many are claiming early simply because of financial hardship and it helps them get by from month to month.
The Business and Finance section of Creators.com cited a reader who had asked whether her ailing 62-year old husband should apply for Social Security benefits early, before all benefits would have accrued (at 62, they would have received $500; at 66, they would have received $700). The gamble is that the husband would have to live long past the age of 66 to benefit at all from the largest money pot. Delaying when seriously ill risks substantial, even total loss, if the claimant should die early. Claimants who expect to live longer, on the other hand, can afford to wait for bigger checks. In this case, where health and quality of life is an issue, the site advised that claiming for benefits sooner may have been the best choice.
Ultimately, delaying your Social Security benefits is not always the better choice. If you’re at a loss whether to claim early or wait until your full retirement age, learn how you can make the most of your Social Security benefits by consulting with a knowledgeable and experienced Social Security attorney. Contact the experts at Jan Dils Attorneys at Law at 877.526.3457 or via this form.
(Source: Taking Social Security Early Can Make Sense, Financial Advisor Magazine, June 4, 2014)
Jan Dils, Attorneys at Law