Social Security: Claim Early or Wait for Higher Payout?
Social Security beneficiaries face a crucial decision: claim benefits early or wait for a higher payout. The choice impacts future income and could affect those still working.
Claiming Social Security before full retirement age (67 for those born in 1960 or later) may lead to reduced benefits if the individual continues working. This is due to the Social Security earnings test, which temporarily withholds some benefits until full retirement age.
Waiting, however, offers advantages. For each year delayed past full retirement age, benefits increase by 5 to 8%. Additionally, benefits are adjusted annually for inflation, providing an extra boost. For instance, a 67-year-old who delays claiming until 70 could see their monthly payment increase by around 24%.
Social Security is funded by contributions from every paycheck, ensuring its sustainability. Robert Brokamp, senior advisor at The Motley Fool, assures that no politician will let the system fail, given its importance to millions of Americans.
The decision to claim Social Security early or late depends on individual circumstances. While waiting can secure a higher monthly payment and better inflation protection, some may need to start benefits early due to health issues or financial difficulties. Understanding the rules and potential consequences is key to making an informed choice.
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