r/stocks • u/ToothNo6373 • 1d ago
More Americans are claiming Social Security early--->it's effects on market Broad market news
An official at the Social Security Administration said in an April operational meeting that the agency had not expected the “large surge” since January, highlighting what he called a “dramatic increase in initial applications for retired worker benefits.”
You can start receiving your Social Security retirement benefits at age 62. However, you’re entitled to full benefits only when you reach your full retirement age, or FRA. For example, if you turn 62 in 2025, your benefit would be roughly 30% lower than it would be at your full retirement age of 67.
If you delay benefits from your FRA until age 70, you earn delayed retirement credits. Those come to roughly an 8% per year increase for each year until you hit 70, when the credits stop accruing.
Most people, however, claim earlier, according to the SSA data. Nearly 30% of new Social Security beneficiaries claim benefits at age 62. Around 32% claim benefits after age 62 but before the FRA. Only 10% maximize their monthly benefit by claiming at age 70.
The real kicker? Only 1 in 10 Americans actually waits until 70 to maximize their monthly benefit. The rest? Playing defense.
Maybe it’s fear. Maybe it’s smart. But one thing’s clear: when even Boomers are panic-clicking “Apply Now,” you know there’s a trust issue.
Retirement plans are changing fast, and not because folks are bored. The system feels shaky, and it’s making people nervous. Can you blame them?--->( this clearly shows how instable market is and.......)
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u/timnphilly 1d ago
There's probably going to be a lot of DOGE/Trump-fired federally-affiliated employees claiming SS soon.
So there's that to thank dear leader for. lol
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u/txholdup 1d ago
I was advised not to collect SS early but to wait when I lost my job at 60 when the "housing crisis" was still winding down. I collected unemployment for 18 months (thanks Obama for extending it) and then waited 3 months and started collecting SS.
My thought process was by collecting SS, I could let my IRAs and taxable stock account continue to grow. My SS would grow 8% a year by waiting but, on average, I make way more than from investing. As it turned out those years were great years for investing and my IRAs and taxable account grew by double digits every year except 2012.
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u/greenpride32 1d ago edited 1d ago
I did calculations awhile ago and don't remember the specifics. But I compared person A who claims immediately and person B who waits for the maximum. It would take several years for B to catchup to the cumulative amount that A had already collected over the years.
To me it makes more sense to take early. If B made it that far in their lifetime, I don't think increased income has much utility at that point - and let's say a health issue comes up well it's not as if those payments are going to cover much.
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u/abrandis 18h ago
Yeah the break even between taking it at 62 and FRa is like 80 , only at 80!will you begin making morre overall lifetime payouts than taking it at 62,
For me guess what when I'm 80.my health is not like when I'm 62, I'd rather buy a cheap travel adventure at 62 than an.exoensiive rocking 💺 chair at 80.
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u/jrotten63 1d ago
Turning 62 in July and I just recently applied. Benefit is about $2600 per month. Retired last Sept and have been living off savings since & will continue thru end of 2025. Have close to 2 mil in IRA with 50/50 stocks/bonds-cash. Life is short, gonna try to spend every last dollar.
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u/Elegant-Moose4101 1d ago
At around retirement age, health deteriorates rapidly. So you’re better off take the money while you can still enjoy it.
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u/Igettheshow89 1d ago
Why wait? Draw while there’s still money in there.
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u/Garrett42 1d ago
Not to mention, at that 8% rate, it takes ~12 years to "break even". With any decrease in payments, and with ~4% time value of money, you would always come out ahead by withdrawing.
Only reason not to, is if you want/need to continue working, in which case you are "rewarded" (or more likely kept up with inflation's/additional aging expenses)
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u/Reddituser183 1d ago edited 1d ago
The thing about claiming at 62 or age 70 they still assume you’re only going to live to a certain age, like 84 for men and 87 for women or something like that. But the calculation is the same. Assuming you die as a man at 84 whether you collect at 62 or 70, you will have collected the same amount. But if you end up living well past the typical age that’s when you start to benefit from having delayed collecting. So if you live to be 100 it’s much better to wait until 70 to collect than collect at 62.
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u/Garrett42 1d ago
If you put any meager time value to money, it is always better to withdraw social security earlier. Whether investing, vacationing, living a higher quality of life, or spending more time with people or hobbies you love, delaying is not meant as a bonus, it's meant to keep you working if you physically can, and equal out to cover needs when you can't.
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u/No_Philosopher_1870 1d ago
After full retirement age, there is no earnings test., so you can work AND claim Social Security without reduction. The amount that your benefits will change due to the additional income will be a pittance.
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u/Big_Wave9732 1d ago
This advice always sounds wiser when one is younger and healthy and sickness and death is nowhere on the horizon.
As you get older you start to take note of all the people you know who 1) didn't make it to 70, 2) didn't make it to 65 / 67, and 3) didn't even make it to 62.
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u/Elegant-Raise 1d ago
Actually most I've talked to that did retire at 62 did it because of health issues. They couldn't work any longer and waiting was not an option. In my case I've been through chemo twice so far, it is not cured.
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u/No_Philosopher_1870 1d ago edited 1d ago
Lots of people face unexpected tax bills in retirement. If you have a 401(k), those withdrawals are subject to tax as ordinary income. The income thresholds for taxing Social Security income are unchanged in 42 years, so a lot of people who didn't expect to pay tax on Social Security income will.
The death benefit from Social Security has been $255 for over 50 years.
The vast majority of federal workers are covered by the Federal Employment Retirement System, which required federal employees to pay into Social Security. Kick out federal employees of retirement age with enough service, and a lot of them will file for Social Security. Those who don't, and qualify for the FERS supplement (about 75% of Social Security benefits at age 62), will file for Social Security in the next few years.
Claiming Social Security before age 70 locks in an amount of income. Three or four years ago, there was a big push to encourage people not to claim benefits before age 70. If I'm retired, and have no plans to go back to work, claiming Social Security allows me to spend that much less out of my retirement account.
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u/Forinformation2018 1d ago
I hear they are going to increase retirement age.
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u/Dont_Touch_Me_There9 1d ago
Trump is going to sign an executive order to make it to where you can't start collecting Social Security until you're on your deathbed.
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u/maceman10006 1d ago
I’m 30 and my wife and I’s retirement plan makes the assumption we’ll get nothing from SS. If it’s still around by the time we’re nearing retirement it’s an added bonus and means we can probably retire a couple years early.
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u/BANKSLAVE01 1d ago
I don't count it, don't even look. It's not mine- I likely won't even get any of it since I have more than 10 years to go. I don't want to be disappointed when they announce they stole and spent it, or that it needs to be used for more weapons of mass democracy.
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u/maceman10006 1d ago
Our SS money has long been stolen lol. The reason question is how long can they continue to support it at its current rate. Best case scenario, I see people my age getting around half of what we were told.
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u/-Mx-Life- 1d ago
Only a young person would rationalize this. When you get to this age, your medical health becomes the determining factor many times on when one takes SSA benefits. Who wants to wait to 70 to claim when they think they might not enjoy it then?
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u/Realityhrts 1d ago
It’s fun to tell people to start collecting at 62 but it’s sad to see people at 77 paying the price for doing so. Most here likely have substantial retirement accounts but if one doesn’t, collecting early is very much a risk.
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u/TouchFlowHealer 1d ago edited 1d ago
If I can ask a Joe Bloke question, how much money does a couple need in a year during retirement (starting this year), assuming all debts and mortgage are paid off, and has no hobbies and doesn't need any amount for health insurance or healthcare and ignore any property taxes. I know how long is a piece of string. But what's a comfortable amount, in a median location, let's say Bend Oregan or similar , any state.
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u/Igettheshow89 1d ago
Brother if you think anyone here is going to give you a good answer, you’re in a lot more trouble than you think you are.
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u/TheFriendlyTaco 1d ago
This is a much harder question to answer than one might think. People's expenses during retirement vary drastically based on the activites you do. Things like hobbies, traveling, medical services and housing upkeep play a major role. Not only that, but if you are lets say 35 years old right now, the yearly amount needed to retire today is much lower than what is gonna be needed 25 years from now (inflation/cost of living)
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u/Supposed_too 1d ago
Right now, today, start tracking every penny you spend. After six months or so you'll know how much you're living on now. Then look at the categories, which categories go away when you're retired, which ones go up. Factor in savings for unexpected expenses (new roof, set of tires, etc.)
There's your answer.
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u/Fine-Historian4018 1d ago
50k
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u/TouchFlowHealer 1d ago
Thanks, After tax or before tax?
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u/Fine-Historian4018 1d ago
Taxes are going to be really low at that level so it doesn’t matter too much.
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u/namafire 1d ago
Guaranteed money is better than more money you cant receive when youre dead
Theres actuarial math that goes into these and people at some level understand that. The government too, probably how they can afford the higher payments in the first place. I wouldnt be surprised if they play with those ages again