Despite the fact that delaying starting your Social Security benefits until age 70 means a 32% increase in the amount you’ll receive, only 10% of non-retirement Americans ages 60 to 65 plan to wait for a larger payout, according to the 2023 US Schroders Retirement Survey.
Consider working with a financial consultant To make sure you have a retirement income that meets your needs.
Why some take out Social Security before their full retirement age (FRA)
People who wait until their full retirement age — which is 67 for anyone born in or after 1960 — receive an 8% increase in their monthly benefit payments for each year they delay claiming. Social security up to age 70. During a retirement period of 20 years or more, the difference equals a significant amount of retirement income.
Despite this, the study found that 40% of respondents who were still employed said they plan to receive their Social Security benefits between the ages of 62 and 65, which would make them ineligible to receive their benefits. maximum retirement benefits — even though they realize that waiting longer will earn them higher payouts.
Instead, the respondents had other concerns: 44% said they were so worried that Social Security money would run out that they would take benefits early to increase the amount of money they would raise. Another 36% said they expect to claim benefits before age 70 because they know they will need the money sooner.
“We have a crisis of confidence in the Social Security system and it’s costing American workers real money,” said Deb Boyden, head of the US Specific Contribution division at Schroders. “Fear of the stability of Social Security keeps people away from money that could improve their quality of life in retirement. Many of them don’t wait until full benefit, let alone capped, which means they will have to generate more income themselves, which increases the importance of saving and investing early to retire.”
These concerns stem from reports that Old Age and Survivors Insurance Trust Fund The OASI fund that provides money for Social Security payments is expected to start declining beginning in 2033. One of the leading solutions cited by experts and supported by the Biden administration is a payroll tax hike that funds Social Security, while a number of Republican lawmakers Some Republican presidential contenders say the solution is to raise the eligibility age for Social Security benefits or reduce future benefits for workers in their 20s.
How many people think they need to retire
The survey also found that to enjoy a comfortable retirement, non-retired survey respondents said they would need to have $4,940 on average. Millennials Those Still Working Expect They’ll Need $5,135 Per Month As workers approach full retirement age, those ages 60 to 65 said they’ll need $4,855 per month to be comfortable. That compares to current retirees who said their average monthly gross income is $4,710, including Social Security. However, 37% reported that their total monthly income was less than $2,500.
People who participated in more active retirement preparations reported higher average retirement incomes. Overall, the study found that the median monthly income for retirees with a financial advisor, including Social Security, was $5,075. And for retirees with a formal financial plan, their median monthly income was $5,810, double the $3,000 per month income reported by those retiring without. financial plan.
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Predicting how much income you’ll need in retirement includes factoring in your current living expenses, debt levels, where you’ll live, and whether you’ll downsize your living arrangements and other elements of your lifestyle that you want in retirement. In order to feel comfortable, most people will need their savings and investments in addition to their Social Security benefits.
Tips about Social Security
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Consider talking to financial consultant On how to make the most of Social Security in your retirement plan. Finding a financial advisor doesn’t have to be difficult. Free SmartAsset tool It matches you with up to three vetted financial advisors who serve your area, and you can place free introductory calls with your advisor matches to select the one you feel is a good fit. If you are ready to find a counselor who can help you achieve your financial goals, let’s start.
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