Los Angeles, California – As retirement approaches, one of the crucial decisions individuals face is determining when to begin receiving their Social Security benefits. This choice can significantly impact the amount of monthly benefits received, making it essential to consider various factors before making a decision.
Your full retirement age (FRA) is the age at which you will receive 100% of your entitled benefits based on your work history. The specific FRA varies depending on your birth year, with the age set at 67 years for individuals born in 1960 or later. Filing for benefits before or after your FRA can affect the amount you receive, with claiming benefits as early as age 62 resulting in a permanent reduction of up to 30%.
Deciding on the optimal age to claim Social Security benefits can be overwhelming, especially given the conflicting advice available. While there may not be a one-size-fits-all answer, research suggests that there might be an ideal age for most individuals to start receiving benefits, potentially increasing the average retiree’s income by over $100,000 over time.
Researchers at financial planner United Income conducted a study in 2019 analyzing retirees’ Social Security claiming decisions and their income throughout retirement. The data revealed that only a small percentage of retirees claim benefits at the optimal age, leading the average retired household to miss out on approximately $111,000 in lifetime income by not filing at the ideal time.
The majority of retirees tend to file for Social Security before the age of 64, even though this may not be the optimal age for maximizing lifetime income. Waiting until age 70 to claim benefits could have significant financial benefits, as indicated by the data showing that around 57% of study participants could have earned more over a lifetime by filing at that age.
While the research points to age 70 as the best time to claim benefits from a financial perspective, it’s essential to consider other factors, such as health and life expectancy, when making this decision. Factors like health issues or an uncertain lifespan may influence the optimal age to start receiving benefits, as well as external circumstances like job loss that may necessitate immediate access to Social Security benefits.
Ultimately, while age 70 may be the optimal time to claim Social Security benefits for maximizing income, each individual’s situation is unique. By carefully considering all aspects of their retirement planning, individuals can determine the best age to begin receiving Social Security benefits that aligns with their personal circumstances and financial goals.