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Why Waiting to Claim Social Security Benefits Still Makes Sense

Does it Still Make Sense to Wait to Claim Social Security Retirement Benefits?
Many workers feel tempted to claim Social Security benefits early due to concerns about the program’s future. However, financial experts caution that rushing to collect Social Security benefits might not be the wisest financial move for most people.
Social Security’s funding challenges are well-documented. The program’s trustees projected in 2024 that the trust fund used to help pay retirement benefits could be depleted by 2033, at which point only 79% of benefits would be payable. Adding to these concerns are operational issues at the Social Security Administration (SSA), including staff reductions and extended wait times for service, which further erode public confidence in the program.
“If you cut that, or there’s a threat of cutting that, that does make the fear of running out of money even greater,” said Kelly LaVigne, vice president of consumer insights at Allianz Life Insurance Company. A recent Allianz survey revealed that 64% of Americans worry more about running out of money than dying. Social Security not providing enough income ranked as the second biggest concern behind inflation.
Why Patience Usually Pays Off
Despite these valid concerns, claiming Social Security benefits early simply to “get while the getting is good” could be shortsighted for many retirees.
“There are people who make the comment, ‘I want to start taking from it now, before it’s taken away from me,'” explained Andrew Herzog, a certified financial planner and associate wealth manager at The Watchman Group in Plano, Texas.
Herzog typically reassures clients that benefit elimination is “very unlikely,” particularly for those already in or approaching retirement. Political leaders, including former President Donald Trump, have pledged not to cut benefits for current retirees. While future retirees might see reduced benefits, the program is unlikely to disappear entirely.
Workers need to understand the significant financial trade-offs of early claiming. Taking benefits at 62 (the earliest possible age) instead of waiting until full retirement age (66-67, depending on birth year) results in a permanent 25-30% reduction in monthly payments.
The financial advantage of waiting becomes even more pronounced for those who delay until age 70. For every year individuals postpone claiming past full retirement age, they receive an 8% increase in benefits. This can translate to a 24-32% boost in monthly checks compared to claiming at full retirement age.
- Increased Benefits: Waiting until age 70 can maximize benefits.
- Life Expectancy Consideration: Beneficial for those expecting to live past 80.
“For those who expect to have a normal life expectancy of 80 years plus, then it can make sense to wait to age 70 to get the maximum benefit,” Herzog said. Even delaying by just a month can meaningfully increase your monthly benefit amount.
When Earlier Claiming Makes Sense
While waiting often provides the largest lifetime benefit, Vanguard research indicates that claiming early can be appropriate in certain situations.
For individuals with shorter life expectancies, the “break-even risk” (receiving a smaller total sum by delaying) should take priority over the risk of outliving their money.
Early claiming can offer additional advantages, such as spreading the tax burden over more years. Lower monthly checks may result in less Social Security income being taxed and could help keep Medicare Considerations income-related monthly adjusted amounts (IRMAA) lower.
- Tax Benefits: Early claiming may reduce taxable income.
- Medicare Considerations: Could help manage IRMAA costs.
However, for many people, compelling reasons to delay claiming remain, especially if a spouse might need to rely on those benefits after the primary earner’s death. Higher monthly benefits also provide better protection against unexpected financial emergencies.
The optimal claiming decision ultimately depends on several factors, including work capability, alternative income sources, and personal comfort level. Social Security typically replaces about 40% of pre-retirement income, according to the SSA, making it just one piece of a comprehensive retirement plan.