Financial Products for Longevity: Social Security
- There are various ages at which you can start claiming your Social Security benefits.
- There are additional ways to supplement the income you receive from Social Security, such as income annuities or the Personal Pension.
Most Americans already have access to a guaranteed stream of income in retirement — Social Security. Social Security is a government-run program and provides qualifying workers a paycheck each month in retirement. While working, you’re required to pay a portion of each paycheck to help fund Social Security under the Federal Insurance Contributions Act (FICA).
When you retire, you get a monthly check from the Social Security Administration that will continue for as long as you’re alive. The size of your benefits depends on the number of years you’ve worked, how large your earnings were during those years, the cost of living, and, importantly, at what age you claim your benefits.
Generally, you are eligible to receive Social Security in retirement, as long as you have worked at least 10 years and you’re at least 62 when you file a claim. However, it’s rarely a good idea to claim your Social Security at 62. Withdrawing at 62 is considered early retirement, and because the government expects to have to pay you for longer, you’ll receive much less in each paycheck.
Between ages 65 and 67, you’re considered traditional retirement age, and you’ll receive the full amount of your benefit. Every year you delay past traditional retirement age (up till age 70), you’ll be rewarded for your patience and receive an 8% increase to your Social Security paycheck!
While this is a general overview, we have a whole breakdown of everything you need to know about Social Security: the good, the bad, and how to sign up.