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Should You Delay Taking Social Security?

August 06
06:55 2012

NEW YORK (TheStreet) — Worried about their financial futures, baby boomers are working longer and postponing the day when they claim Social Security. Although most people are eligible to start receiving checks at age 62, a growing number are waiting until they are older than 65.

According to a study by the Center for Retirement Research at Boston College, 50.7% of 62-year-olds claimed Social Security in 1995. By 2007, the figure had dropped to 37.6%. After spiking briefly during the financial crisis, the percentage of early claims has continued on its downward trend.

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Researchers give a variety of reasons for the changes. For starters, older people are working because they are living longer and staying healthier.

Many of the older workers are women whose mothers were homemakers. “More women are in the workforce, and they are working longer,” says Matthew Rutledge, a research economist at the Center for Retirement Research. Many employees have no choice but to stay on the job at a time when wages are stagnating and the economy is sluggish. In 1995, 23.6% of men aged 62 to 64 earned wages at full-time jobs. By 2010, the figure had risen to 33.4%. About another 20% worked part-time or were self-employed.

The changing shape of pensions has also played a role in employment markets. In the past, workers could retire earlier because they had traditional defined-benefit plans that provided guaranteed income for life. Once they reached retirement age, many workers had little incentive to stay on the job because the rich pensions paid almost as much as wages did. But in recent years, the pensions have vanished, replaced by 401(k) plans that come with no guarantees. Now many employees must keep working to stash more money into their retirement plans. Changes in Social Security are also pushing people to delay retirement. In the past, 65-year-olds could claim full Social Security benefits. But to cut costs, Congress raised the normal retirement age. The full retirement age for those born from 1943 to 1954 is now 66. Those born in 1960 will have to wait until they are 67 to take full benefits.


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