Retirement Planning

Carla Fried “Time for Major Rethink on When to Claim Social Security”

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(Carla Fried, CBS MoneyWatch Interview)
If you happen to count yourself among the majority of Baby Boomers who fear outliving their money in retirement more than they fear death, it’s time to break with American tradition. I am talking about the fact that more than two-thirds of Americans claim their Social Security retirement benefit before they reach their full retirement age, effectively denying themselves payouts that could be more than 75 percent higher if they just waited a bit longer to starting collecting. If you’re looking to boost your retirement income, it’s time for a major rethink on when to claim Social Security.

Social Security’s Early-Bird Benefit Can Cost Plenty

When you opt for early Social Security benefits you accept a payout that can be just 70 percent of what you’d be entitled to if you held out until what Social Security deems to be your full retirement age. (Anyone born in 1960 or later has a FRA of 67). Even if Social Security is only going to be a small piece of your retirement income pie, a haircut of as much as 30 percent isn’t exactly inconsequential.

And you could be turning down even more. The payout if you claim Social Security at the earliest possible age (62) is about 75 percent less than what you would be entitled to if you wait to start taking Social Security at age 70. You can use this retirement calculator to see how your start date impacts your benefit amount.

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