Taking Social Security Early – Boomers Panic

Boomers are in a full-blown Social Security panic. We are claiming benefits at age 62 in record numbers. In 2007, 38% of 62-year olds claimed Social Security retirement benefits. In 2009, it was 42%. Financial planners think the number is even larger now.

This trend is bad for the retiree but perhaps good for the long term health of the Social Security system. For each year prior to age 70 that benefits begin, the retiree gives up 7%-8% in benefits. This loss  applies as well to the surviving spouse. This can make sense if your health is expected to give you a short life span. It may also be necessary if you are unemployed and broke.

However, it seems that a lot of folks are claiming benefits at age 62 because they fear that Congress will cut their benefits if they don’t. This is crazy thinking in my opinion. That might be a concern if you are 42 but not 62. I’m not alone in this thinking. Alicia H. Munnell, director of the Center for Retirement Research at Boston College, had this to say about boomer fears:

It’s so off the mark. There is no question the benefits will be paid. The worst that could happen is that the system would be able to provide only 80% of the benefits under current law.

The Social Security Administration estimates that benefits could be reduced by 22% and could continue to decline, barring any changes to the system, starting in 2037. A fear of benefit cuts in 2037 is no reason to surrender so much now, by claiming at age 62.

The author of a recent article on this subject also surmises that many boomers simply fail to comprehend what they are losing by taking Social Security benefits early. I agree and I suspect that this ignorance is particularly acute when the interests of the surviving spouse are considered.

Perhaps every early potential claimer should first be forced to read the hard numbers on paper, such as these from the article:

A top-earner retiring at 62 would get $1,803 a month. By waiting until 66, he’d increase that amount to $2,442, and delaying until 70 would bump the monthly payment to $3,256. Another way to look at it: someone who delays taking Social Security until 66 rather 62 will collect more money over time if they live until at least age 77.

Read more here: When Should You Take Social Security?

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