Mark Hulbert: Why People Who Claim Social Security Early Often Live To Regret It

Ted

FYI: Your retirement standard of living could very well be worse if you claim your Social Security benefits at age 62.

That’s surprising because the Social Security Administration goes to great lengths to ensure that, regardless of when retirees claim their Social Security benefits, they will be no better or worse off. Those claiming at age 62 — “early claimers,” as they’re called — will receive more years of benefits than those who wait, but at a reduced rate. Assuming their life expectancy is equal to what the actuarial tables predict, the total benefits they receive in retirement will essentially be the same as if they had waited and received fewer years of higher monthly benefits.

A new study nevertheless finds that early claiming leads to a significant increase in the number of retirees living in poverty.
Regards,
Ted
https://www.marketwatch.com/story/why-people-who-claim-social-security-early-often-live-to-regret-it-2018-09-04/print

MOZART325

I claimed at age 62. "A bird in the hand is worth two in the bush". But the main reason I claimed early is because my tax bracket is goig up at age 70 because of high IRA RMDs.

Ted

@MFO Members Like MOART325, I also took it at 62 , and never looked back.
Regards,
Ted

dstone42

The author of the article says "A new study nevertheless finds that early claiming leads to a significant increase in the number of retirees living in poverty."

But the study itself says "upon taking all income sources into account, they found that early claiming is associated with a greater probability of living below the poverty line"

Not the same.

I'd imagine that poorer folks take the Social Security money as soon as they can. They don't get rich from claiming early, but mostly remain in poverty.

And they probably don't "live to regret it".

David

Old_Joe

@dstone42- Good points.

MikeM

I would think taking SS early is synonymous with quitting work early. A key to having more money in retirement, or the inverse, being in poverty, is how early you stop the pay checks.

Mark

There is also the little matter of the history of family longevity. Males in my family - 75 years or less. Needless to say I took SS as soon as I was eligible with absolutely no regrets or second guessing.

Old_Joe

@Mark: Same here: Males 75 or less. I'm going on 80. Health folks say should be good for at least another 5 or 10. (Probably drooling on myself in some "rest home", though.)

Go figure...

Don't forget- our cohort's diets, nutrition, and medical care were completely different from our parent's generation. (And most of us grew up with Wonder Bread or equivalent with lots of great preservatives. My theory is that's why we're so well preserved.)

Mark

@OJ: Truth there old friend. Diet, exercise and just all around taking care of yourself often skews the averages. At least that's what I'm hoping for.