As the Great Retirement continues, newly retired workers are adopting a new strategy to ramp up their monthly Social Security checks by delaying their claim for benefits, the Washington Post reports November 1.
The number of Americans retiring has increased, with a 5 percent increase in pensions among workers ages 65 to 69. The U.S. retiree population grew by about 3 million during the pandemic as incentives to leave the workforce increased for affluent Americans. Federal stimulus, rising market profits and house prices, as well as health concerns, encouraged them to take early retirement.
But the number of workers claiming Social Security benefits has fallen significantly in the past year, by 5 percent compared to 2020, and the biggest drop in two decades. Usually, during periods of economic hardship, people are more dependent on social assistance, so these trends are seemingly counterintuitive.
Experts suggest that some retirees may be making ends meet in the short term because of federal stimulus aid and unemployment benefits.
“Extended unemployment benefits and pandemic benefits have contributed to lower claims for benefits,” a spokesperson for the Office of the Chief Social Security Actuary told the Social Security Agency. Washington Post.
Lauren Hersch Nicholas, PhD, an economist at the University of Colorado-Denver, said, “It may be that all the incentive benefits were effective in deterring them from making a full decision to claim benefits in the short term.”
The longer someone waits to claim Social Security benefits, the higher the monthly check will be when a claim is made. An employee who earns $60,000 annually and decides to retire at age 65 would see a monthly pay increase from $1,418 to $1,550 by deferring a claim for benefits for a year.
By making ends meet on short-term federal assistance and insurance benefits, employees can delay claiming Social Security, boosting future payments. This suggests a better-than-expected outcome for older Americans in the wake of the pandemic.
“This is a much better set of results among older workers than we expected when the pandemic started,” Dr. Nicholas on the Washington Post.