Thursday, May 29, 2014
Many Americans retire at the wrong time and end up leaving thousands of dollars in lifetime benefits behind. This adds up to around $25 billion each year that could be collected by retirees. Even those that retire at age 62, the earliest age to take Social Security, leave money on the table because their lifetime benefits are reduced.
A recent study by the Government Accountability Office showed why too many Americans take Social Security early and the consequences of doing so:
- Those retiring at the earliest age often need Social Security to supplement their income. Individuals who wait are less reliant on the program. One way to maximize Social Security is to save more and fully fund your 401(k) and other retirement plan.
- Retiring early gives you greater health security, especially with the Affordable Care Act (ACA). Online health exchanges sell policies and will issue to anyone, regardless of any pre-existing conditions. Having an ACA policy could give you flexibility in finding a policy, which may buy you time so you can wait to collect Social Security.
- Waiting nets you a bonus in higher Social Security benefits. “Despite higher monthly benefits for those who delay, many people still claim Social Security retirement benefits at age 62, the earliest age of eligibility. In 2014, these early claimers will see their monthly benefits reduced by 25 percent compared to what they would have received if they had delayed claiming until age 66, the current full retirement age.”
See John Wasik, How To Get Social Security’s Biggest Bonuses, Forbes, May 28, 2014.