Over 66 million people rely on Social Security benefits to sustain themselves after retirement. With Social Security on track to become insolvent (or going broke) by 2034, it’s no surprise people are worried about how secure their benefits are. Social Security’s insolvency is dependent upon several factors. According to the Social Security Administration, one thing influencing that is the fact that more and more people are pushing back their Social Security retirement age to collect a fuller payout. However, this trend could also be the thing that saves Social Security.
The new trend
You can begin collecting Social Security benefits at age 62. However, your benefits will permanently be reduced by 25-30 percent if you collect early. If you push your Social Security retirement age to 70, though, you can maximize your benefits and collect 8 percent more for every year you delay collecting.
As of 2004, Social Security reported that 50 percent of men and 55 percent of women were collecting Social Security benefits early. By 2016, only 32 percent of men and 37 percent of women were collecting benefits early. However, during this time, the number of people waiting until 70 to claim their benefits also rose, according to the Center for Retirement Research (CRR) at Boston College.
The CRR found that people were pushing their Social Security retirement age back because they were healthier and working longer. Therefore, they didn’t need Social Security as soon as previous generations had. However, this also means these retirees are living longer than previous generations, and therefore requiring more Social Security funds to sustain them for the rest of their lives. CRR believes this is part of the reason why Social Security is becoming insolvent.
With that said, if this trend of people pushing back their Social Security retirement age continues, it will benefit the whole system as Social Security will be paying fewer people.
How the Social Security retirement age works
When you can start receiving benefits depends on when you were born. The full retirement age (FRA) is gradually moving to 67, but you can begin receiving benefits as early as 62. To find your FRA, refer to the helpful chart below.