Drawing Social Security Benefits at 62: Now A Declining Trend - Seattle Times
Many financial advisors for years have been advising clients to hold off on filing for Social Security benefits until their full retirement age or, if they can, until age 70, when the delayed retirement credits stop adding to the payout. They continually hammered on the point that filing early results in a discounted benefit, stressing that this discount is permanent and likely to result in cash shortages when money is needed most in the later stages of retirement.
Well, it looks like many folks aging into Social Security eligibility since the pandemic arrived in 2020 have listened to this advice, but what’s surprising is the logic behind the decision. In fact, although three million workers joined the retirement ranks during the pandemic, the number of applicants for Social Security benefits has actually fallen by 5%, according to a Washington Post analysis of Bureau of Labor Statistics data. This unusual twist in statistics requires some analysis, because it’s not readily known how many of those “retiring” have elected to temporarily forgo benefits, relying instead on other income sources (e.g., stimulus payments, generous unemployment benefits, much improved 401k balances, etc.) In any event, the trend emerging now is the reverse of what typically happens in times of economic stress, when people tend to turn to Social Security for a lifeline.
The shift in thinking on early retirement and Social Security benefits is the subject of an article by Andrew Van Dam posted on seattletimes.com, addressing what’s come to be known as “Great Resignation.” His article explores the likely reasons why benefit applications are being delayed, including several personal accounts of retiree thinking. Read his post here…