Luke Delorme | Money Talk: Why it's hard to delay Social Security

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GREAT BARRINGTON >> Retirees face several major financial risks — market risk, inflation risk, and mortality risk. If financial markets (stocks and bonds) drop drastically, savings can be depleted early. If inflation spikes, retirees may spend more than they'd planned. Finally, if you live way longer than you planned, you may not have enough money to cover those extra years. Increasing Social Security benefits by claiming later is one way to help protect against these risks.

Economists and planners almost universally agree that at least one member of a couple should delay Social Security collection until age 70, at which point they max out benefits. For today's retirees, delaying from the earliest possible claiming age of 62 until the delayed claiming age of 70 would increase monthly benefits by about 76 percent. As an example, this could be the difference between a monthly benefit of $1,500 and $2,640. You would have to give up income during the years from age 62 to 69, but you would get a guaranteed annuity from the government that will last as long as you do. This guarantee protects you from market fluctuations, inflation, and the risk of living too long.

Luke Delorme is a research fellow at the American Institute for Economic Research in Great Barrington.


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