social security

Bank Ingrates

It’s always a delicate balance deciding on a “stop work” age to begin claiming Social Security benefits. But experts predict that retirees opting for payouts ahead of full retirement age will be a hot trend next decade. Even with a strong financial incentive to wait, skepticism about the system going bankrupt or benefit amounts plunging after 2034 will drive retirees to claim ASAP.

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How old do you have to be to get Social Security payments?

To collect Social Security at all, anyone born after 1928 must have worked at least 10 years total. The Social Security Administration calculates those 10 years using four “work credits” earned for each year worked and you’d need a total of 40.

A person’s total retirement benefit amount is derived from the yearly earnings in the 35 years you made the most, adjusted for inflation. How old you are when you stop work also dictates how much you collect. “Full retirement age” is 66.

The benefits of starting Social Security at age 70

The SSA encourages people to retire later than full retirement age by increasing payouts by 8 percent for each extra year you wait to start claiming your earnings, up to age 70. It also permanently reduces the benefit amount for anyone who starts getting paid before age 66.

The youngest a person can start benefits is 62, but the SSA reduces the full retirement amount by 25 percent for those who start 62, by 20 percent at 63, by 13.3 percent at 64 and by about 6.7 percent at 65. Still, the majority of Americans do claim ahead of the full retirement age.

Why it will be all the rage to claim early next decade

Next decade’s retirees may opt for the early-claim penalties due to predicted exhaustion of the system’s asset reserves by  2034. Retirees anticipate corresponding cuts to payments in about two decades and want to get their money while they can. Some also fear the whole system will go bankrupt, though the program is structured so that won’t happen.

One factor that makes the decision even more difficult is that Congress could enact a solution so benefit slashes after 2034 never become a reality.