Should you access Social Security benefits as soon as possible or wait to try to maximize your monthly benefit? Everyone’s situation is slightly different, but there are some really compelling reasons to delay taking advantage of the benefits you’re getting.
Let’s look at the top three reasons for delaying receiving your Social Security benefits until age 70.
1. You have a high life expectancy
Life expectancy has a significant impact on this decision. The two main components to consider are:
- Your current health condition.
- The longevity of your family.
If you are healthy and your family has a history of living well into their 80s or 90s, it makes sense to increase your monthly benefits by waiting until age 70 to claim Social Security.
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In other words, as long as you expect to live past the age of 81, you will receive more overall benefits. Larger and fewer checks will outweigh the number of smaller and more frequent checks you will receive if you order earlier.
This is also important because your health care costs after age 80 are likely to be higher, so the extra income can make a big difference.
2. You plan to continue working
Many Americans plan to continue working beyond their usual retirement age. A 2021 Cision survey found that nearly 33% of older Americans plan to continue working well into their 70s.
As life expectancy continues to rise, it is likely that many Americans plan to work throughout their 60s. In this case, it makes a lot of sense to delay getting Social Security benefits until 70 because your benefits can be penalized by continuing to work.
If you are below full retirement age, the Social Security Administration deducts $1 for every $2 of annual income you earn over $1,560. The minimum is $51,960 if you reach full retirement age that year, and the deduction is $1 for every $3 of earnings. Plus, you can pay higher taxes on Social Security benefits since you get temporary income You’ll be higher while you’re still working.
While there are times it might make sense to take it social Security While you’re still employed, in general, it’s best to wait until you retire fully or at least make less than $1,560 to claim your benefits.
3. You do not need additional income
In my opinion, the number one reason for taking Social Security benefits early is because you need the income. But if you don’t need the extra income to continue living comfortably, it’s probably best to delay getting your benefits.
If you plan appropriately for retirement, you probably have enough monthly income from retirement accounts like yours 401(k)And the pensionor Ruth Iran To cover your expenses and the lifestyle you want.
If this is the case, you should almost certainly wait until age 70 to maximize the monthly benefits (assuming you have a long life expectancy). After all, you can get approximately 60% more cash each month by waiting (assuming your full retirement age is $1,500, the benefit at age 62 would be 30% less or $1,050. Maturity at $70 would be 120% or $1,800, so $1,050 / $1,800 = 58%).
As your life slows down, this extra monthly income will provide a security blanket and peace of mind so you can focus on spending time doing the things that matter most to you, rather than focusing on finances.
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