Warning over ‘big myth’ that causes Americans to miss out out on crucial retirement income
- Economist Emerson Sprick warned retirees not to take advantage of benefits too early
- Sprick said too many Americans are worried about running out of Social Security funds
- But he warned that claiming benefits too quickly would result in life sentences
Americans are taking their Social Security benefits too early and it’s costing them in the long run, an economist has warned.
Too many retirees believe the “myth” that Social Security funds will run out and need to take advantage now, said Emerson Sprick, deputy director of the economic policy program at the Bipartisan Policy Center.
Seniors are advised to wait until their “full retirement age” (usually around 66 or 67) before receiving the benefits. They can technically claim it from age 62, but there is a 30 percent penalty.
Sprick’s comments come after a new report warned that Social Security funds are expected to fall short by 2035 unless Congress acts quickly.
βThe biggest myth about Social Security is that when the trust fund runs out, the program just disappears,β Sprick told me CNBC.
Emerson Sprick (pictured) said too many retirees believe the ‘myth’ that Social Security funds are running out and they should take advantage of them now
Seniors are advised to wait until their “full retirement age” (usually around 66 or 67) before receiving the benefits. They can technically claim it from age 62, but there is a 30 percent penalty
The official Society Security funds may have been depleted, but the program will still generate revenue from payroll taxes and benefits will still be paid even if they are reduced.
A 2023 survey from the Nationwide Retirement Institute found that 75 percent of adults age 50 and older believe Social Security will run out in their lifetime.
It’s no wonder that many feel rushed to take advantage of the benefit. A report from the Bipartisan Policy Center shows that the most popular age to claim is 62.
But this results in a lifetime reduction in payments, which depends on your full retirement age and varies depending on your year of birth.
For example, those born in 1937 and earlier have a retirement age of 65, while those born between 1943 and 1954 have a full retirement age of 66.
Those born in 1960 or later have a retirement age of 67.
Social Security recipients benefited from a 3.2 percent increase in their payments between 2023 and 2024
Benefits, provided to 71 million Americans, are rising every year in line with inflation, which has remained stubbornly persistent
If someone with a full retirement age of 67 retires at age 62, benefits will be reduced by the highest percentage of 30 percent. But if they wait until age 64, the reduction is 20 percent.
And the government will pay those who delay retirement β thanks to a credit created by Congress in 1972.
It means that an older worker will see his benefits increase by 8 percent every year he works past full retirement age until his 70th birthday.
Someone with a retirement age of 67 can receive 124 percent of their benefits if he or she does not register until age 70.
And retirees should also be aware that Medicare eligibility does not begin until they turn 65.
It comes after policy analysts predicted that Social Security benefits will rise by $60 a month next year, in line with inflation.