Many Americans are gloomy about the future of Social Security. And they aren’t keen on waiting until age 70 to start collecting it.
More than a quarter of Gen Xers and 4 in 10 boomers said they will start payments as soon as they’re eligible at age 62, even though their monthly benefit may be reduced, according to a new study published by Northwestern Mutual.
Uncertainty about the future of Social Security is haunting Americans as withdrawals from the program exceed contributions. Unless policymakers act, the shortfall could lead to a cut in benefits for retirees and disabled Americans.
That fear is “one factor driving the increasing amount of money workers say they will need to feel financially secure when they retire,” said Keller Lindler, a financial adviser at Northwestern Mutual.
Americans’ magic number for the amount they think they’ll need to “retire comfortably” jumped to $1.46 million, up more than 15% from last year and topping the $1.25 million mark from four years ago.
About a third of Americans said “will Social Security be there when I qualify for it” easily tops their list of burning questions about retirement.
“Social Security remains a top retirement question for Americans — above other major planning challenges such as outliving life savings, planning for long-term care, managing taxes, and budgeting for healthcare,” according to the Northwestern Mutual researchers.
Only three in 10 Gen Xers, whose oldest members are turning 61 this year, and 21% of boomers said they plan to delay receiving Social Security as long as possible to maximize their monthly benefit.
Fewer than half of Gen Xers and boomers said they would start receiving benefits when they hit their full retirement age.
You can take Social Security as early as age 62, but your benefit can be slashed as much as 30% from what it would have been at your full retirement age. For anyone born in 1960 or later, your full retirement age is 67.
If you delay benefits from your full retirement age until age 70, you earn delayed retirement credits. Those come to roughly an 8% increase for each year until you hit 70, when the credits stop accruing.
Deciding when to start Social Security doesn’t always come down to when your monthly payments will be the biggest. There are a slew of factors to consider — the amount of money you have saved in retirement accounts and other assets, such as home equity and outside investment accounts, as well as your health and whether living to your 90s is common in your family.