Many seniors worry about not having enough money to pay their bills during retirement — and that includes those who manage to build a nest egg during their working years. If you’re scared that your savings will fall short, then it pays to do whatever you can to get your hands on more retirement income. And if you play your cards right, you could end up with a rather impressive 24% raise for your senior years.
It’s all about claiming Social Security strategically
You’ll most likely be entitled to collect Social Security during retirement. And believe it or not, you have the potential to grow your benefits by 24%. All you need to do is hold off on claiming them until you turn 70.
You’re actually allowed to start collecting Social Security beginning at age 62. But filing at that age will result in a reduced benefit for life because you’re not entitled to your full monthly benefit (which is calculated based on your earnings history) until you reach full retirement age (FRA).
FRA is a bit different for everyone. Here’s what yours looks like, depending on when you were born:
|Year of Birth||Full Retirement Age|
|1955||66 and 2 months|
|1956||66 and 4 months|
|1957||66 and 6 months|
|1958||66 and 8 months|
|1959||66 and 10 months|
|1960 or later||67|
For each year you delay your Social Security filing past FRA, your benefits grow 8%. Once you turn 70, you no longer get credit for holding off on filing. But if your FRA is 67 and you claim your benefits at age 70, you’ll give them a 24% boost. And that boost will then be yours to enjoy for the rest of your retirement.
Of course, to be in a position to claim Social Security at 70, you may need to alter some of your retirement plans. If your intent was to leave the workforce at age 67, for example, you may not be able to do that in the absence of having access to a Social Security check every month. So you may need to work longer than you initially anticipated or at least hold down a part-time job after leaving your career behind.
But if you want the financial security that comes with scoring a 24% raise for the rest of your life, then delaying benefits makes a lot of sense — as does sacrificing to make that happen. Remember, the money you bring into retirement from your savings isn’t guaranteed to grow or last. But if you hold off on claiming Social Security, that 8% yearly boost is guaranteed. And that may bring the peace of mind you need to enjoy your senior years to the fullest.
Of course, for some people, delaying Social Security isn’t possible. If health issues force you out of a job sooner, you may have to sign up for your benefits at FRA or even before. But it pays to consider holding off on Social Security beyond FRA — if not until age 70, then at least until an age that gives your benefits a nice bump and makes you feel better about the idea of no longer having a paycheck from work.