Retirees Are Taking Social Security Later

While the financial outlook for Social Security is little changed from 2013 to 2014 (in 2034 the retirement program will exhaust all its reserve funds and be unable to pay full benefits), data shows that retirees are waiting longer to take their Social Security benefits.

While 62 remains the most popular age to begin collecting Social Security benefits for men and women, the percentage of retirees collecting benefits at 62 has been steadily dropping over time.  According to the US Census Bureau, 57% of men born between 1930 and 1934 began receiving benefits at age 62.  For men born between 1938 and 1942, the percentage collecting Social Security at age 62 dropped to 50%.  And for men born in 1943 and 1944, the percentage collecting Social Security at age 62 dropped again, to 45%.  Women are exhibiting similar trends in delaying Social Security benefits until a later age.  60% of women born between 1935 and 1937 took Social Security benefits at age 62, while that number dropped to 50% for women born between 1943 and 1944. 

This trend in delayed Social Security retirement benefits runs counter to the recent increase in Social Security disability benefits paid out.  According to the recently released annual report card from Medicare and Social Security trustees, Social Security disability benefit payments increased from 7.9 million recipients in 2004 to 11 million in 2013, a 39% increase.   Disability benefit payments totaled $78.2 billion in 2004, and increased to $140 billion in 2013, a whopping 79% increase.  This dramatic increase in benefits and recipients threatens the disability program, as current funding will force the program to cut funding to 81% of benefits in 2016 without Congressional intervention.

As most people are aware, the longer you delay receiving benefits, the higher your monthly Social Security benefit will be.  And taking benefits early can reduce monthly benefits by as much as 30%.  But does the increased benefit explain the substantial drop in retirees collecting Social Security benefits early?

Longevity is one reason that retirees are delaying Social Security benefits beyond age 62.  As life expectancy increases and medical advances improve pre-retirees’ health, more people are choosing to remain in the workforce later in life.  These individuals find satisfaction and purpose in their employment, and are reluctant to give that up as early as previous generations have.  Many people also begin a second career after age 60 and enjoy the change of pace and greater fulfillment these second careers afford them.

Necessity is another reason that many retirees are delaying Social Security benefits beyond age 62.  With the economic collapse of 2008, many workers need to work longer because a) they have had a significant change in employment that has caused them to delay retirement for financial reasons, or b) their retirement nest eggs were not properly allocated prior to the bear market of 2007-2009 and they have never recovered to the point where they can comfortably retire.

The optimal age to begin taking Social Security benefits for retirees will depend on a number of factors and financial considerations.  To help determine your optimal age to begin collecting Social Security benefits please give our office a call at 419-878-3934 to schedule a time to discuss your options.  And be sure to attend one of our upcoming Savvy Social Security Planning workshops this fall.