Deciding when to claim Social Security benefits is one of the most important retirement moves you will make. Social Security is by far the largest retirement asset for all but the wealthiest Americans, and the only source of guaranteed lifetime income - with incredibly valuable annual inflation adjustments.
Aversion to perceived loss is strong: survey respondents tend to underestimate the odds of living past certain ages, and that even people who expect to live longer don't push out their claiming dates as far as they should.
Patience pays: survey respondents were asked to imagine that they had some money coming to them - and that they could have $1,000 today, or wait a year and get $2,000. People who were more willing to wait the year also were more likely to claim Social Security after age 65.
Perceptions of ownership and fairness color people's decisions: People need to change their thinking about Social Security from something that's due to them as income, and start seeing it as an insurance policy protecting them from the risk of longevity.
Consider this example for a single, 62-year-old woman earning $50,000. Retiring today, she would receive an estimated $14,000 in annual benefits. Waiting until 66 gets her 35 percent more annual income ($19,000), while waiting until 70 ratchets up benefits a full 79 percent, to $25,000.
If our retiree were fortunate enough to live to age 95, she would collect $82,000 more in lifetime benefits by waiting until age 66 to claim - and $157,000 more if she waits until age 70.
Check out these five important takeaways from Filing Early for Social Security? Therapy May Be In Order
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