Most boomers have done a terrible job preparing for retirement. And the majority will compound an already bad situation by retiring too early and giving away too much potential income.

In 31% of cases, medical issues require some to take as early a retirement as possible; they have no choice.

[ad#Google Adsense 336×280-IA]But the rest of us do. And, in virtually every case, unless you have a mountain of money stashed away, you need to hang on for a few more years, at least until you hit full retirement age.

Still, the majority of people file for benefits at age 62, and many do it out of fear that the money won’t be there down the road.

From my perspective, the political costs of disturbing that apple cart are so high, I’m certain the benefits will be there. In fact, I believe it is as close to a guarantee as we get in this life.

And if you still think it’s okay to check out of the work world as early as possible, here’s another reason to put it off.

Most are aware you take about a 25% cut in benefits if you take the early out. But what the majority don’t understand is the losses don’t stop there.

Let’s assume that, at age 66, your check would be around the average, $1,300 a month. That means if you file early at 62, you’ll receive only $975.

Some believe this is an acceptable trade-off. Because with the total benefits received between age 62 and 66, at $1,300 a month, it would take three years just to break even.

And if you wait until age 70 for the highest payout, from an accumulated benefits perspective, the early-out plan looks even more convincing.

But this argument ignores two of the biggest threats to our retirements: inflation and longer life expectancies.

If we assume a 3% annual inflation adjustment from the Social Security Administration, the $975 annual inflation increase in just the first year is 34% less than it would have been had you waited until the full retirement age of 66. It’s a difference of $29 versus $39 per month.

That will really add up over the next 20 or 30 years.

If you use the maximum payout numbers at age 70, the cumulative numbers are even more convincing.

The total costs of claiming your SSA benefits too early are so great, virtually no one should consider it.

The 20 or 30 years of unemployment, which is what retirement really is, can drain even the best-funded retirement accounts. The majority of people who are choosing to leave the work world at the first opportunity need a major reality check.

Two to three decades is a long time. Think long and hard before you pull the trigger on this one.

Good investing,

Steve

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Source: Wealthy Retirement