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Social Security: Worth the Wait, says Expert

Many North Carolinians miss out on tens of thousands of dollars by claiming Social Security benefits early, according to new data. Courtesy: DodgertonSkillhause/morguefile.com
Many North Carolinians miss out on tens of thousands of dollars by claiming Social Security benefits early, according to new data. Courtesy: DodgertonSkillhause/morguefile.com
November 16, 2015

RALEIGH, N.C. - Social Security benefits are tempting to take as North Carolinians make plans to retire, but experts say the decision can come at a cost.

While some people need the income because of health factors or unemployment, Kristen Arnold, income security policy analyst for the National Academy for Social Insurance, said it's important to understand the ramifications of cashing out too early.

"If you're working, you don't have to take Social Security," she said. "You can wait and, for each year you wait, your monthly benefits increase by 8 percent - and that monthly increase in benefits lasts for as long as you live."

Since benefits increase each year you delay taking them, Arnold said claiming them at age 70 instead of 62 can increase a person's lifetime benefit amount by as much as 76 percent, which amounts to tens of thousands of dollars. However, 62 remains the most prevalent age for claiming Social Security benefits, according to the most recent data.

Experts recommend talking to a qualified financial adviser before making any decision, but right now, Arnold said, many North Carolinians are losing out.

"Almost three-fourths of beneficiaries in North Carolina are receiving reduced monthly benefits due to early claiming," she said.

Among the reasons people sometimes cite for claiming benefits early is a belief that congressional squabbles and government problems could cause Social Security to run out of money. Arnold said that theory simply doesn't hold water.

"Your personal decision on when to take benefits will not affect Social Security's finances," she said, "and the program's finances are much stronger than many people may realize."

Social Security is fully financed for the next 15 to 20 years, she said, and roughly 75 percent financed beyond that.

Her organization has a toolkit to help with decisions about when to claim Social Security, available online at nasi.org.

Stephanie Carson, Public News Service - NC