These days, many people are living longer than they expect. There a significant amount of senior citizens in the 80’s and 90’s who are either in assisted living facilities or receiving regular home care. Many of these seasoned citizens didn’t expect to live past their late 60’s or early 70’s. This means that they may not have established a financial plan for this portion of their lives, and could have claimed Social Security too early.
According to Forbes, about two-fifths of all Americans receive retirement benefits around the age of 62. By doing so, many American pass up their chance to get 76% higher benefits by not waiting until they are 70 to claim retirement. Only 2% of Americans start claiming Social Security retirement once they turn 70.
Forbes asserts that there are three main reasons for this. The first reason is that many people are low on funds by the time they retire and needs to collect Social Security. The second reason is that Social Security tells the general public that whether we collect less money earlier or more money later, we’ll end up with the same amount on average. This is why many people don’t see the problem in collecting Social Security early. The third reason for early collection is superstition. Some people believe that by preparing for a longer life, they are asking for early death, and want to take advantage of their monetary benefits while they can.
This also indicates that there are three types of people who collect Social Security early: those who have no choice, those who are relying on and being misled by what Social Security indicates, and those who feel they are preparing for a short term future that may extend beyond their planning.
Social Security generally doesn’t account for the fact that many of its beneficiaries are now living into their mid to late 90s. Social Security also fails to realize that offering early collection date options is essentially like offering life insurance policies to senior citizens without explaining the policy clearly. When seniors forego their benefits for eight years or so to get higher benefits for the rest of their lives, this is similar to paying an insurance premium that results in more money when the senior citizen needs it.
Overall, seniors should consider that overall living can be expensive. A fulfilling and functional life can sometimes include prescriptions, glasses, home health aids, hearing aids and dental care. These things are not covered by Medicare. In addition to Social Security offices, it is imperative for seniors to create a solid and sequential financial plan that will provide them with an excellent quality of life for years to come.