More than 90% of Americans should wait until age 70 to collect Social Security

"Social Security and Medicare face a funding shortfall (...) The fund's reserves will be depleted and will only be enough to provide 76% and 91% of benefits."

Published by

Verónica Silveri Pazos

1 de diciembre, 2022

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A study published by The National Bureau of Economic Research states that "virtually all U.S. workers aged 45 to 62 should wait beyond age 65 to collect their Social Security (SS) benefits. And more than 90% should wait until age 70."

The authors of the report estimate that people in this age range who claim their social security payments before age 70 will lose more than $182,000 in benefits.

NATIONAL BUREAU OF ECONOMIC RESEARCH

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Social Security provides financial assistance to retired workers and survivors of deceased workers through the Old-Age and Survivors Insurance (OASI) Trust Fund, as well as to disabled workers and their families through the Disability Insurance (DI) Trust Fund.

Funds are depleted

The SSA announced that seniors would receive a nearly 9% cost-of-living adjustment increase by 2023. This is the largest increase in nearly 40 years, as inflation also reached record highs. This increase will cause the funds to run out ahead of schedule. According to a 2021 trust fund report:

Both Social Security and Medicare face long-term funding shortfalls based on currently scheduled benefits and funding. Both programs will experience cost growth substantially in excess of GDP growth through the mid-2030s due to the rapid aging of the population. Medicare also sees its share of GDP grow through the late 2070s due to projected increases in the volume and intensity of services provided.

The OASI will only be able to pay the expected benefits until 2033. In about 10 years, the fund's reserves will be depleted and the income will only be enough to pay 76% of the benefits. On the other hand, the Disability Insurance (DI) Trust Fund will be able to pay benefits until 2057. In about 34 years, reserves will be depleted and tax revenues will cover 91% of the benefits.

9 out of 10 receive SSA benefits

Workers, under federal law, can begin collecting a portion of their social security benefits as early as age 62. According to the Social Security Administration (SSA) in June, nine out of 10 Americans age 65 and older receive part of their benefits each month. This translates to 66 million people. It amounts to a total of more than $1 trillion in payments.

According to SSA data, Social Security benefits account for 30% of the income of the elderly. Approximately 40% of retirees are more than 50% financially dependent on social security; approximately 13% are totally dependent. The report states:

These financial realities make retirees' inability to maximize their lifetime Social Security benefits especially acute, but also a potentially remediable problem.

Therefore, the report suggests that Americans work longer and delay collecting their social security benefits in order to receive more money each month.