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A promising trend in taking Social Security benefits

Not all news is bad when it comes to Social Security benefits. A recent study of claims data shows that the percentage of workers turning age 62 who start Social Security benefits at that age has declined significantly since 1996.

Why this is good news: Most retirees will be more financially secure in retirement if they can enjoy the higher Social Security income that results from delaying the start of their benefits.

The report from the Boston College Center for Retirement Research (CRR) found that in 1996, more than half of all men (56 percent) who attained age 62 started Social Security benefits at that age. By 2013, this percentage had declined to a little more than one-third (35.6 percent). The results are similar for women. In 1996, almost two-thirds (62.8 percent) of them started Social Security at age 62, but that dropped to well under half (39.5 percent) by 2013.

The Social Security system is set up so that you can start taking retirement income benefits as early as age 62, but doing so results in a benefit fully reduced with the lowest monthly retirement check. However, your Social Security paycheck will increase for each month you delay starting benefits, up until age 70, at which point your benefit gets no further increase.

Delaying your Social Security benefits has two powerful advantages:

Of course, there are exceptions to these advantages. For instance, people who are very sick may benefit by starting Social Security early, as would older workers who are laid off and have absolutely no other income to fall back on.

However, with the decline of traditional pension benefits, the modest retirement savings of baby boomers and people living longer, it's more important than ever to squeeze as much income as possible from Social Security's lifetime retirement paycheck. Delaying benefits is the best way to do that.

Prior analyses of Social Security claims data looked at the percentage of people filing each year who were age 62. But that information distorted the picture because the number of people turning age 62 has been increasing each year due to the surge of baby boomers reaching retirement age.

So, why are more workers are delaying Social Security benefits? For at least two reasons:

  • With so much being written recently in the popular media about the advantages of delaying Social Security, more people are learning to think more carefully about their benefits and how delaying them can improve retirees' financial security.
  • The economy has recovered, enabling people to continue working longer. During the Great Recession, many older workers were laid off and had no alternative but to start their Social Security income immediately.

The CRR report's findings should encourage more people to think about the best age at which to start collecting Social Security benefits.

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