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A recent report from the Social Security Administration indicates that a strong economy has helped the program, but its trust funds may be depleted in the next decade if no changes are made. Despite this, many Americans have a misplaced worry that benefits will disappear once the trust funds run out. In reality, even if the trust funds are depleted, the program will still have revenue from payroll taxes to pay out benefits, although they may be reduced. A survey found that 75% of adults aged 50 and older believe that Social Security will run out in their lifetime.

Data shows that retirees often do not wait until they are eligible to receive 100% of the benefits they have earned. The most popular age for beneficiaries to claim their benefits is 62, with 29% claiming at this earliest possible age in 2022. However, claiming benefits at age 62 results in about a 30% benefit cut compared to waiting until full retirement age, which is generally between 66 and 67. In 2022, 62% of beneficiaries claimed before their full retirement age, while only 16% claimed at their full retirement age. Waiting past full retirement age up to age 70 can result in an 8% benefit increase each year, but only 10% of claimants waited until age 70.

The top reason people cite for claiming benefits early is the concern that Social Security may run out of money and stop making payments, according to a survey. The second most common reason is the immediate need for the money. Psychological factors, such as a sense of ownership over earned benefits or an aversion to losing money, may also play a role in early claiming decisions. Despite these concerns, experts generally recommend delaying Social Security benefits, as waiting can result in higher monthly payments and annual adjustments for inflation.

Experts emphasize that delaying Social Security benefits is usually the best course of action, as evidenced by the significant increase in monthly payments that can result from waiting. Even delaying benefits for just a few months can have a positive impact on retirement security. Retirement experts agree that unless there is a personal reason such as a lack of income or poor health, delaying Social Security benefits can provide greater financial security in the long run. Additionally, Social Security benefits are adjusted annually for inflation, providing another incentive for waiting to claim benefits. The annual cost-of-living adjustments are higher when applied to larger benefit amounts, making it financially advantageous to delay claiming benefits.

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