You and I face a common reality: We're getting older. There are plenty of good things to look forward to as we age, including retirement.
One of the biggest decisions Americans will have to make as they get older is when to begin collecting Social Security retirement benefits. Many choose to file for benefits as early as possible. Not me. Here's the only reason I'd ever consider claiming Social Security at age 62.
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It's simple
I'd only file for Social Security benefits when I'm 62 if I can't work. It's that simple.
There are a couple of primary ways this could happen. It's possible that I could have health problems that prevent me from continuing to work. There's also a chance I could lose my current job and be unable to find another.
I certainly hope that neither of these scenarios plays out. And I have reasons to anticipate that they won't.
I'm in great health now. I don't smoke or have any other unhealthy vices. I've never even been admitted to a hospital for any reason.
Genetics could work in my favor. My parents have enjoyed good overall health in their senior years. My grandparents and great-grandparents all lived long lives.
As for my job, I write about investing and personal finance. Interest in those topics should grow over the next decade and beyond, especially as more Americans approach their retirement years and the generational transfer of wealth proceeds.
Perhaps the biggest threat to my goal to continue working comes from technology. OpenAI's new ChatGPT chatbot has plenty of people wondering if their jobs might be replaced by artificial intelligence (AI) in the not-too-distant future. I'm cautiously optimistic, though, that my job will still exist until I'm ready to retire.
Why not claim early?
Why am I deadset on not claiming Social Security as early as possible? As the informant said in the movie All the President's Men, "Follow the money."
Filing for Social Security at age 62 would cause me to receive 30% less than I would if I wait until my full retirement age of 67. That's a steep price to pay, in my view.
I've considered claiming Social Security retirement benefits when I turn 67. However, I'll probably still hold off. Again, follow the money.
A paper published by the National Bureau of Economics (NBER) in November 2022 described an intriguing analysis of collecting Social Security benefits at different ages. Three economists did a lot of number crunching. And they found that waiting until age 70 to claim Social Security boosts the average lifetime benefits by 76%, adjusted for inflation, compared to filing at age 62.
If I filed for Social Security retirement benefits at 62, losing that extra 76% would probably haunt me. I'd rather wait.
Different strokes
Not everyone is in the same boat I'm in. The old adage about "different strokes for different folks" is certainly applicable. Some people have health problems that make it wise to claim Social Security benefits as early as possible. Others face unexpected job losses that necessitate filing for retirement benefits at age 62.
I also realize that many people don't enjoy their jobs. They're counting down the days until they can retire. Thankfully, I love my job and want to keep writing for a long time to come (even if I slow my pace of work somewhat).
But my situation will be similar to that of many Americans as they approach their retirement years. Holding off on filing for Social Security will usually be the best choice from a financial perspective. Delaying equals dollars.
