Waiting until 70 to sign up for Social Security can increase your benefits by over 75% in some cases, compared to starting at 62. That's a compelling reason to delay benefits, but there are also some good arguments for signing up sooner. Here's one scenario in which you definitely want to sign up right away.
How prepared are you for retirement?
Some people can't save as much as they'd like during their working years. When they enter retirement, whether by choice or through an unplanned circumstance like a job loss or illness, they find themselves in a tight financial spot. If they exhaust their savings, they might have to rely upon family members to support them or otherwise fall into debt.
In this scenario, starting Social Security early could be a lifesaver. The monthly checks can supplement your personal savings, enabling you to leave part of your nest egg invested for longer.
For example, if you have $250,000 in retirement savings and you spend about $4,000 per month, you'd have to withdraw the full $4,000 from your retirement account every month if you're relying upon that alone. But if you're claiming a $1,500 monthly Social Security check, now you only have to withdraw $2,500 per month from your personal savings. That means you could keep that $1,500 invested for a little while longer so it can accrue more earnings.
This is only one example. If you want a realistic idea of how much you'll get from Social Security, create a my Social Security account. This will show you how much you'll receive per month if you sign up for benefits at different ages.
What if I don't want to start Social Security early?
Sometimes, starting Social Security earlier than you planned, or even right away at 62, is the lesser of two evils. But if you really don't want to sign up right away, there are some other things you can try to get the money you need.
You could continue working longer than you had planned, possibly transitioning to remote or part-time work as you age. You could also consider starting your own business or switching jobs to better accommodate your preferred retirement lifestyle.
You could also see if you qualify for other government assistance programs designed to help low-income families. These could reduce your annual out-of-pocket expenses as well, possibly enough to allow you to delay Social Security for a little while.
Another option is to delay Social Security benefits for a little while, perhaps to your full retirement age. This might not be as long as you'd like to wait, but every month you delay increases your checks slightly until you reach your maximum benefit at 70. Even waiting a few months to sign up would lock in a permanently higher rate for the rest of your life. When you start claiming, these larger checks will reduce how much you have to withdraw from your personal savings.
Don't forget to coordinate with your spouse if you're married. Spouses might qualify for Social Security benefits in their own right if they have their own work history. Moreover, they could also be eligible for benefits, even without ever working, as long as the other spouse qualifies.
In the case of major income disparities, it's often advantageous for the lower earner to sign up for benefits early, if necessary, to help the couple out financially while the higher earner delays benefits. Then, when the higher earner signs up later, the Social Security Administration should switch the lower earner to a spousal benefit if it's worth more than the benefit they're already receiving.
There is no universally right or wrong time to sign up for Social Security. The important thing is to understand how your decisions will affect your benefits and, by extension, your dependence on your personal savings moving forward. Explore a few different scenarios and choose the one that provides you with the greatest financial security possible.
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