No matter how old you are at the moment, you probably have retirement in the back of your mind. At some point, you will look forward to not working and being able to enjoy the fruits of your labor from all those years. At the same time, there are many decisions that you will need to make before you start to take out any of your retirement money. One of those decisions revolves around social security and when you should begin to draw your benefits. While you are welcome to start receiving monthly checks as soon as you turn 62, there are certain drawbacks to doing so. The longer you wait, the more money you will receive each month until you die. This keeps going up every year until you turn 70. The drawback, of course, is that you do not receive any money until you decide to start taking the money. This is a decision that you should not enter into lightly. With that being said, it is helpful to know why so many people today are waiting until they turn 70 before they start to draw on their social security benefits.
People Are Living Longer
One of the reasons why people are taking social security at age 70 and not before is simple: They are living longer. There used to be a day when it was only expected that you would live a few years into your social security years. That is no longer the case. It is quite common for both men and women to live well into the 80s and beyond. Armed with that information, people are doing the math. By delaying the taking of their benefits at age 62 and waiting until age 70, the monthly benefits that are received will be considerably higher for well over a decade and possibly more. Because of this, the perceived earning and spending power of waiting eight years outweigh the years of receiving nothing. Of course, there is a slight risk to this in that one can die before they begin taking social security, but that seems to be a risk that more and more people are willing to take.
You Miss Out On Benefits
By taking social security early, you miss out on many benefits. This is a decision that cannot be reversed. That means that once you start taking social security at age 62, you cannot change your mind at a later date. There are some minor exceptions to this rule, but they are rare. In essence, you will be leaving money on the table each and every month. Of course, the federal government would love nothing more than you to start taking the money early. They know that you are likely to live much longer than previous generations did. The system is set up for you to receive monthly checks from the day you start receiving benefits until the day you die. The less they have to pay each month, the more money that remains in the social security trust fund. You do not want to leave your benefits on the table. If you are healthy and feel like you are going to stick around to quite a while longer, there really is no reason not to wait until you are 70 before you start to take your social security.
People Are Working Longer
Another reason why people are taking social security at age 70 is that they are working longer. It is no longer considered essential to retire at age 62. Because people are starting to feel healthier at an older age, they do not feel the need to stop working. This is not always out of financial necessity either. If people still feel that they can be useful and they enjoy their job, there is no reason to stop working just so that they can take social security. In fact, there is little incentive to do so. By continuing to work past the age of 62, benefits received at age. 70 can continue to increase based on the amount of money that one is paying into the system. Because earnings are limited once you start taking social security, it is not always to continue working you start receiving benefits. So, if you are still working and earning a decent income, you will likely want to wait until you reach 70 years of age before you start to take your social security. Just keep in mind that there is absolutely no financial benefit to continue waiting past the age of 70 to do so.
Spouses Get Increase Survivor Benefits
One more important reason that people are waiting until 70 to start taking social security is for their spouse. Because people are living longer, this means that it is likely that one spouse may outlive the other spouse by quite a few years. The longer you wait to start drawing social security, the more your spouse will get once you are gone. This assumes that you are the one that receives the largest social security payment. This is a major incentive to wait until you 70 years of age before taking social security. You want to make sure your spouse is well taken care of when you are gone, and this is a great way to achieve that goal.
These reasons alone illustrate why it is important to consider waiting until you are 70 before you start taking social security. No matter how old you are at the moment, you probably have retirement in the back of your mind. At some point, you will look forward to not working and being able to enjoy the fruits of your labor from all those years. At the same time, there are many decisions that you will need to make before you start to take out any of your retirement money. One of those decisions revolves around social security and when you should begin to draw your benefits. While you are welcome to start receiving monthly checks as soon as you turn 62, there are certain drawbacks to doing so.