When Do Most Americans Claim Social Security?

Every year, the Social Security Administration (SSA) increases the full retirement age at which you can collect benefits. This began several years ago to help the beleaguered benefit system. In 2018, the age will increase by two months to age 66 and four months. SSA bases it on your birth year, so the 2018 adjustment affects people born in 1956 and later—and there are a lot of them.

The vast number of baby boomers who are retiring creates a financial challenge for the SSA, but so is the fact that most Americans are electing to claim SSA retirement benefits before reaching the full retirement age. Over 60 percent of men are and nearly 75 percent of women are, too. No one is claiming benefits late, either. If they don’t claim early, they’re claiming benefits at the exact retirement age possible.

One of the main reasons that people are claiming benefits early is because the Cost of Living Adjustment (COLA) hasn’t kept up with rising inflation. In 2018, seniors are expected to get the largest COLA adjustment they’ve seen in years, but it is still not enough to keep up with rising costs, particularly in health care. While any increase is welcome, seniors will never be able to catch up on COLA increases alone. They’re on fixed incomes, and that’s why people are opting in for early retirement benefits.

Your overall SSA retirement benefit is based on your lifetime earnings. SSA applies a formula for inflation and then determines your primary payout amount that you’ll receive at the full retirement age. Just know that SSA offers an eight year window from age 62 to 70 for claims. Claiming early comes with fairly strict penalties. Let’s say your age is 67 for the full benefit, but you claim early at age 62. The compounded effect is that your benefits are reduced by 30 percent. While an early claim can get you short-term cash, the long-term reduction in your overall retirement income can have a significant impact.

It’s even better if you can claim your benefit late, after you’ve reached full retirement age. This can mean an eight percent permanent increase in your income.

Every individual is different, and has reasons for claiming early or late. Just consider where you are in life and work out the pros and cons of claiming early, on time or late.


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