Social Security is pretty flexible, and you're allowed to sign up for benefits at any point during an eight-year window. The earliest age to file for benefits is 62, but if you don't wait until your full retirement age (FRA), you'll lower your benefits for life. FRA is either 66, 67, or somewhere in between, depending on your year of birth.
Meanwhile, you can opt to delay your filing past FRA, and for each year you do, your benefits will increase by 8%. That incentive, however, runs out once you turn 70, which is why that's generally considered the latest age to file for benefits, even though you can technically sign up at a later age. With that in mind, here are a few reasons why filing at 70 is a solid move that could really set you on the path to financial security during retirement.
1. The boost you secure is guaranteed for life
Ideally, you'll enter retirement with money in an IRA or 401(k) plan, and that money will stay invested so it continues to generate growth. You may have a few years where your portfolio performs well, but you may have a few years when it tanks. During those times, you may need to seriously limit the extent to which you take withdrawals to avoid locking in serious losses.
The great thing about delaying your Social Security filing until age 70 is that the 8% yearly boost you lock in will be guaranteed for life. This means that even if your investments don't serve you well for a period of time, you'll at least have a higher Social Security benefit to fall back on.
2. You may end up living for many years
Though there are strategies you can employ to help make your retirement savings last as long as possible, there's no guarantee you won't eventually deplete your nest egg — especially if you end up living longer than expected. The beauty of Social Security is that there's no expiration on those benefits — you'll get a monthly paycheck as long as you're still kicking. As such, if you snag the highest possible monthly benefit, you'll have more income to look forward to at a time when your savings may have run dry.
3. Your senior living costs are unpredictable
You'll often hear that it's wise to map out a retirement budget before you wrap up your career so you can see what your ongoing expenses will entail. But while you can attempt to narrow your living costs down, surprises might pop up that eat away at your income, like home repairs, property tax hikes, and medical issues.
If you file for Social Security at age 70, you'll have extra money on hand each month to tackle these potentially unpleasant surprises. And that alone could help you avoid a fair amount of retirement stress.
The downside of waiting until age 70 to claim Social Security is just that — waiting. It's hard to sit tight when you know you're entitled to your benefits sooner, and to delay your filing until age 70, you may need to push yourself to work longer. But there's lots to be gained by claiming Social Security at 70, so keep these perks in mind as you decide when you should sign up for benefits.
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