Should You Claim Social Security Early? A Tough Money Decision

Is it better to take your Social Security money early, or wait for bigger payments later? That's the big question a certified public accountant (CPA — a licensed financial expert who handles taxes and money advice) asked in this advice column.

First, some basics. Social Security is a U.S. government program that pays monthly income to retired people. You can start claiming it at age 62, but your full benefit usually comes at age 67 (called your "full retirement age"). If you wait even longer — up to age 70 — your monthly payment grows even bigger.

The CPA's worry: A government report says Social Security's main savings fund (called a "trust fund") could run low by 2032. If lawmakers do nothing, retirees might only get 78% of their expected payments. So the CPA tells clients to grab the money now, before any cuts happen.

But the columnist warns this isn't so simple. Here are the key numbers:

• Claiming at age 62 instead of 67 permanently cuts your monthly payment by up to 30%.
• A $1,000 monthly benefit at age 67 grows to about $1,240 (24% more) if you wait until 70.
• If you wait until 70, you "break even" (catch up on lost money) at around age 79.
• Only 8% to 10% of people actually wait until age 70 to claim.

The columnist's key point: 78% of a bigger benefit (from waiting) is still more than 78% of a smaller benefit (from claiming early). Research from Boston University and the Federal Reserve found that over 90% of workers should wait until age 70.

Bottom line: There's no perfect answer. It depends on two personal questions: *Do you need the money right now?* And *do you expect to live into your 80s?* If yes to living long, waiting usually pays off more.

This is an AI-generated summary. Read the original article at: https://www.marketwatch.com/story/take-the-money-while-you-can-im-a-cpa-and-tell-my-clients-to-take-their-social-security-early-am-i-wrong-a50e55e8?mod=mw_rss_topstories