Many baby boomers plan to sign up for their Social Security checks as soon as possible. A new survey found that 45 percent of those currently 61 years old will begin getting Social Security at age 62, the first year recipients can apply. Boomers cited financial necessity, health and longevity concerns, and a desire to collect as much as possible from the system as their reasons for early claiming.
But collecting your due at age 62 could be a mistake. Social Security benefits will increase by approximately 7 percent each year this group of boomers delays claiming from age 62 to 66 and by 8 percent per year until age 70. That is almost certainly a better return than investors are getting from their investments right now, and it can insure healthy retirees against the possibility of outliving their savings.
Baby boomers say they can't afford to delay claiming because they need the money now. A Fidelity Investments survey of 300 61-year-olds found that only 10 percent plan to wait until their full retirement age to claim, and an additional 9 percent say they will claim between ages 67 and 70. The baby boomers will use the funds to pay for basic living expenses, such as food, utility costs, and mortgage payments (77 percent). And they expect Social Security to make up as much as half of their retirement income. "Many Americans who are within one year of beginning to collect their Social Security retirement benefits may be planning to rely too much on it, considering Social Security currently only funds a little more than one third, or 37 percent, of an average retiree's income," says Carolyn Clancy, an executive vice president at Fidelity.
Another reason boomers may be signing up for Social Security as soon as possible is a pervasive fear that the government will not pay out the promised benefits. A different survey of 5,000 older employees by consulting firm Watson Wyatt released earlier this month found that 51 percent of workers ages 50 to 64 are not confident about receiving their promised Social Security checks after they retire. "People with less overall confidence in their retirement resources are likely to worry more about Social Security and Medicare because they cannot rely on personal savings," says Alan Glickstein, a senior retirement consultant at Watson Wyatt. "And these fears may be further exacerbated by the recent turmoil in financial markets."
Current market conditions have caused a quarter of the 61-year-olds in the survey to delay their retirement or claim Social Security earlier than planned, Fidelity found. And 38 percent plan to work at least part time after signing up, which could temporarily reduce payments, depending on the amount earned.
The Social Security Administration unveiled an online calculator in July that allows workers to more accurately predict what future benefits will be at various retirement dates.
Tell us, at what age do you plan to sign up for Social Security?