Before Delaying Social Security, What’s the Biggest Question You Need to Ask?
One of the best things about Social Security is that you can start receiving benefits at any age you like. To file, you must be at least 62 years old and no later than 70 years old. Despite the fact that you can file for Social Security benefits after the age of 70, there is no financial incentive to do so.
For the rest of your life, you will receive a higher monthly benefit if you delay Social Security. If you wait until you’re 70 years old to begin collecting retirement benefits, you’ll have a paycheck that’s 24 percent higher each month for the rest of your life if your full retirement age (FRA) is 67.
In spite of how appealing it may be, delaying benefits is not always a good idea. When considering delaying your Social Security benefits, you’ll need to answer a tough question first.
Delaying Benefits May Not Pay Off for as Long as I Expect to Live
Your benefits will increase by 8% for each year you delay filing for Social Security after the full retirement age (FRA). This means that if you file at age 70, you can get a maximum boost of 24% to 32%, depending on your FRA.
Even though delaying your Social Security benefits may give you more money each month, it will not necessarily give you more money over the course of your life. Before signing up for benefits late, you’ll need to think about the latter point.
Your break-even point will help you determine if delaying your filing is worth it. If you file at FRA instead of later, you’ll receive the same total amount of Social Security benefits at that age.
If your FRA is 67 and you’re eligible for a monthly Social Security benefit of $1,600 at that age, but you wait until 70 to file, your break-even age will be 82 1/2. In either case, you’ll have received $297,600 in Social Security benefits by the time you reach that age.
The longer you think you’ll live, the better it makes sense to postpone your filing. You may want to sign up for benefits sooner if you aren’t sure that will be the case.
If you were to live to the age of 80, signing up for Social Security at the age of 67 rather than waiting until the age of 70 would save you $11,520 over your lifetime. However, if you live until the age of 85, you will be $11,520 richer if you wait until the age of 70.
Which Decision Should You Make?
Delaying Social Security benefits is always a risk since no one can predict their lifespan without the aid of a crystal ball. However, if you are in good health in your 60s and have a strong family history of longevity, you may want to consider delaying your filing past the FRA. For those in poor health, however, filing at FRA or even earlier may be preferable — even as early as age 62, if circumstances allow for it to be justified.
Your ultimate objective should be to collect as much Social Security income as possible over the course of your entire life. You may be able to do this by delaying your filing, but you must be confident in your decision. You may also want to file sooner if you’re unsure.
Most Retirees Fail to Take Advantage of the Additional $18,984 in Social Security Benefits
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