Here’s a wonky reason you should probably be claiming Social Security later than your full retirement age.
Share to linkedinIt used to be that everyone got Social Security retirement benefits at age 65. Then Congress tinkered with the system, first in 1956, and again in 1983, so retirees could claim benefits at an earlier age or at a later age. Early claimers get smaller monthly payouts and late claimers get larger monthly payouts. Those payouts were designed to be fair for individuals with average life expectancy, so the cost to Social Security should stay flat. But that’s not how it has played out.
Two of those levers are longevity and interest rates. Rising longevity means people get benefits for longer. So, a smaller reduction in benefits for early claiming would be required to be fair. In terms of delayed claiming credits, rising longevity would call for a smaller bonus. Interest rates have the same effect.
An added wrinkle is the fact that the old 65 “full retirement age” benchmark has been moving up: It’s 67 for those born in 1960 or later.
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