Many times folks get in such a big rush to claim their Social Security benefit that they lock in reduced benefits without considering how this decision fits in with their long term needs and other sources of retirement income.
Just because you can claim Social Security benefits at age 62 doesn’t mean that you should. If fact depending on when you were born, your annual income will be reduced by 25% if you start taking your checks at age 62. That means if you have earned a $1,000 per month benefit at your normal retirement age you will only receive $750 per month if you start at age 62. Multiply that reduction by the many years you will live in retirement and you’ll find you could be leaving tens of thousands of dollars on the table!
On the other end of the scale you can receive increased payments if you delay receiving benefits beyond your normal retirement age. For each year up to age 70 that you delay receiving Social Security benefits your monthly check will increase by 8%. So I you were expecting to receive $1,000 per month at your normal retirement age you could boost your monthly check to $1,320 per month just by waiting until age 70 to start receiving benefits.
So for someone with the same work history the monthly Social Security retirement benefit could range from a low of $750 to a high of $1,320. That is more than an 75% difference in monthly income! And it is a difference you will likely live with all your life.
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