"According to research from the Senior Citizens League, 2/3 of seniors rely on Social Security for over half of the income that they receive. Since Social Security benefits are such an important income source for so many, it's worth carefully considering when you should claim benefits. You can start collecting Social Security retirement income when you are just 62 years old, but that is well below the full retirement age that you'll need to reach in order to claim your standard (unreduced) benefit."
"The Redditor's theory seems to make sense at first glance. After all, an early Social Security claim results in a 6.7% reduction in benefits during each of the first three years once you add up the monthly penalties that apply. If you claim more than three years before your full retirement age, each of those additional years will result in a 5% benefits reduction."
About two-thirds of seniors rely on Social Security for over half their income. Social Security can be claimed as early as age 62, but claiming before full retirement age reduces the standard benefit and can shrink it by as much as 30%. One person plans to claim at 62 while keeping IRA assets invested, expecting compound growth to replace the lost benefits and to collect more payments if life is shorter. Early claiming reduces benefits roughly 6.7% per year for the first three years and about 5% per year for additional years before full retirement age. The tradeoff depends on expected investment returns and longevity.
Read at 24/7 Wall St.
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