A new report finds that almost no retirees are making financially optimal decisions about when to take Social Security and are losing out on more than $100,000 per household in the process.

Social Security benefits are fundamental to the financial security of most retirees. About 50% of current retirees report that more than half of their annual income comes from Social Security, while a third report that more than 90% of their income comes from Social Security benefits.

When claiming Social Security, you have three options: You may begin taking benefits between age 62 and your full retirement age, you can wait until your full retirement age, or you can delay benefits and take them anytime up until you reach age 70. If you take Social Security between age 62 and your full retirement age, your benefits will be reduced to account for the longer period you will be paid. If you delay taking retirement, depending on when you were born, your eventual benefit will increase by 6 to 8 percent for every year that you delay, in addition to any cost-of-living increases.

Most U.S. adults claim Social Security by the time they turn 63, even though their monthly Social Security income would be higher if they waited to claim it later. While some are served well by claiming Social Security early, such as those that expect to live relatively short lives or the spouses of breadwinners, economists have found that many retirees can maximize the amount of income they have in retirement by delaying their decision to claim Social Security benefits.

The new report, conducted by United Income, an online investment management and financial planning firm, found that only 4% of retirees make the financially optimal decision about when to claim Social Security. Nearly all of the retirees not optimizing their benefits are claiming benefits too early. The study found that 57% of retirees would build more wealth if they waited to claim until age 70. However, currently more than 70% of retirees claim benefits before their full retirement age. Claiming before full retirement is the financially best option for only 6.5% of retirees, according to United Income.

The report is attached here –

Download (PDF, 190KB)

For additional information concerning social security disability appeals, visit:

Social Security Disability Appeals

(This blog post is adapted from an article on the ElderLawAnswers website. Mr. Vanarelli is a founding member of ElderLawAnswers.)