Postponing your claim could make for a more comfortable retirement.
When it comes to signing up for Social Security, you get a choice. You can take benefits once you turn 62. But if you don’t wait until full retirement age (FRA) to file for Social Security, you’ll have to accept a reduced monthly benefit for life. FRA occurs at age 67 for anyone born in 1960 or later.
There’s also the option to delay your Social Security filing past FRA and score a higher monthly benefit in the process. Once you turn 70, the financial incentive to wait runs out. But if your FRA is 67 and you file for Social Security at 70, you’ll get to boost your monthly benefit by 24% — for life.
Of course, waiting to claim Social Security might mean having to make certain sacrifices, like working longer. But the upside may be worth it.
When you get to reap long-term rewards
Many seniors are eager to get their Social Security income as soon as possible, so they rush to file for benefits early. But a recent Edward Jones survey revealed that current retirees who filed for Social Security on the later side were more likely to say that decision significantly improved their lives than those who filed early.
In fact, 43% of late filers pointed to their decision as one that improved their retirement. On the flip side, only 31% of early filers could say the same.
Think about the different things you want to do in retirement. Maybe you want to spend your senior years traveling extensively. Or maybe that’s not a goal, but you want to be able to enjoy activities, dine out locally, and basically just maintain a comfortable lifestyle without worrying about money.
Either way, a late Social Security filing could be what it takes to make that happen. So it may be worth it to make a near-term sacrifice to put off your claim and enjoy a higher monthly paycheck for life.
Of course, that near-term sacrifice could mean having to keep working (either full-time or part-time) until your late 60s or age 70. If you have a stressful job, that’s not an easy thing to do.
On the plus side, working longer means getting an opportunity to not only score a higher Social Security paycheck, but pad your savings. And both could open the door to more options once your career finally wraps up.
A good way to compensate for a lack of savings
Not only might a delayed Social Security filing help you enjoy your retirement more, but it might allow you to make up for a less-than-robust nest egg. Many people struggle to fund a retirement plan because other expenses monopolize their incomes.
If you file for Social Security on the later side, your higher monthly paychecks could help make up for the smaller withdrawals you’ll inevitably have to take from your savings. All told, a late filing could really be your ticket to avoiding financial stress in retirement.
