Why Taking Benefits Too Early Could Cost You Thousands in Lost Retirement Income
Scenario: You’re Approaching 65 and Considering Claiming Social Security
You’re nearing age 65 and thinking about claiming your Social Security benefits. It seems like the right time—Medicare starts, retirement might be on the table, and you’re ready to stop working. But claiming now means locking in a reduced benefit for life.
Here’s the tradeoff: claiming at 65 gives you money sooner, but less of it—permanently.
Claiming at Age 65: Immediate But Reduced Benefits
- Average monthly benefit at 65: $1,720
- Percent of full benefit received if FRA is 67: ~86.7%
- ✔ Starts income immediately
- ✔ Useful if you’ve stopped working or need the money now
- ✘ Locks in a permanent reduction in monthly checks
- ✘ You miss out on higher income for life
Who Needs It
- People with limited income or no access to savings
- Those in poor health with lower life expectancy
Who Doesn’t
- Healthy individuals who can work or draw income elsewhere
- Anyone trying to maximize lifetime retirement income
Waiting Until Full Retirement Age (67): Bigger Benefits for Life
- Monthly benefit increase vs. age 65: ~15% more
- Benefit at full retirement age: 100% of what you earned
- ✔ Higher lifetime income, especially if you live into your 80s or beyond
- ✔ Helps guard against inflation and unexpected long-term costs
- ✘ Requires income from other sources while waiting
- ✘ Takes discipline and a longer financial runway
Who Needs It
- People in good health with family longevity
- Those with enough savings or income to delay claiming
Who Doesn’t
- Individuals who absolutely need income now
- People with terminal illnesses or major health conditions
Use a GLWB With Advanced Payouts to Bridge the Gap
A flexible way to generate high income now while preserving Social Security growth later
- Guaranteed Lifetime Withdrawal Benefit (GLWB) with an advanced payout option can produce 8%–9% income now, tapering down over time with a built-in income floor (5%-6% withdrawal rates).
- ✔ Creates immediate income to cover living expenses until you claim Social Security
- ✔ Lets you delay benefits until FRA or even age 70 for a much higher check
- ✔ Offers downside market protection and optional spousal income continuation
- ✘ Requires upfront premium
- ✘ Income will decrease over time, though never below a guaranteed floor
Who Needs It
- People retiring at 65 who want to delay Social Security for a higher payout later
- Those with savings they can reposition for income planning
Who Doesn’t
- Individuals who need fully liquid assets
- Those with low savings who can’t afford the initial premium
Example: $250,000 GLWB With Advanced Payout to Delay Social Security
You invest $250,000 into an annuity with a Guaranteed Lifetime Withdrawal Benefit (GLWB):
- Ages 65–76: Receive $22,500/year (9%) to bridge the gap while delaying Social Security.
- Age 76+: Income adjusts to $15,000/year (6%), guaranteed for life—even if the annuity is depleted.
- By delaying Social Security to age 70, your benefit increases by up to 32%, giving you more income for life.
- ✔ High early income
- ✔ Bigger Social Security later
- ✔ Lifetime income protection
- ✘ Income lowers after year 11
- ✘ Requires upfront investment
Want to see how much income you can get? Contact The Annuity Expert’s financial advisors and insurance agents for free quotes and comparisons. Book a call today—no obligation.
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