According to a recent study, retirees who take their Social Security benefits too soon are losing thousands of dollars in pension savings.
Per the research supported by the Federal Reserve Bank of Atlanta, retirees who postpone taking benefits until age 70 can increase their lifetime median discretionary expenditure by around $182,370.
How Old You May Start To Claim Your Social Security Benefits?
While Americans can begin accessing their Social Security benefits as early as age 62, the amount they receive will be reduced compared to what they would receive if they waited until their full retirement age.
Waiting until age 70 to start receiving Social Security can have a significant impact on an individual’s discretionary spending throughout their lifetime.
According to research, delaying Social Security until age 70 can result in a 10 percent boost in discretionary spending over a lifetime.
This means that the average worker in America could see an additional $182,370 (£147,327.60) in discretionary spending by waiting until age 70 to start receiving their Social Security benefits.
This extra income could help retirees maintain a higher standard of living, travel more, pursue hobbies, or simply have more financial security in their later years.
However, it’s important to consider individual circumstances and financial goals when making decisions about when to start accessing Social Security benefits.
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There Will Be Funding Gap For Benefits
The program anticipates that it will owe more in planned benefits in the upcoming years than it will bring in through income.
In order to maintain planned payouts without having to make cuts, Social Security maintains trust funds that it can draw from for around ten years. Reduced benefits are a real possibility, though, once those cash reserves are depleted.
Furthermore, if you’re an average income, you may currently anticipate that Social Security will replace around 40% of your preretirement salary.
But, the program will give you significantly less replacement income if benefit cuts take effect. And as a senior, that could make it very challenging to pay your bills.
Thus, it’s critical that you increase your savings efforts. Raising your savings rate could mean the difference between coping just fine in retirement, even if Social Security is drastically reduced, and being in financial straits.