When Should I Claim Social Security If I Have a Large Nest Egg?

Many seniors struggle with the decision of when to claim Social Security, and for good reason. A lot of retirees rely on those benefits as their primary income source, or as a major one.

But what if you don’t have to depend too heavily on Social Security because you’re sitting on a generous-sized nest egg? It may be that you started funding an IRA or 401(k) plan from a young age, and that you’ve been investing your savings savvily for many years.

If so, and you now have a multi-million-dollar nest egg at your disposal, Social Security might serve as a secondary income source — and a more minor one at that. In that case, you really can’t go wrong when choosing a filing age — no matter which one you decide on.

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A less stressful decision

When you’re counting on Social Security to pay most of your retirement bills, you need to be very careful about when you sign up for benefits. But when you’re in the comfortable position of having plenty of money to your name, it takes a lot of the pressure off.

Still, it’s important to weigh your filing options so you make the best call for your retirement. You’re entitled to your full monthly benefit based on your personal wage history once you reach full retirement age, or FRA. FRA is 66, 67, or somewhere in between, depending on your year of birth.

Meanwhile, you’re allowed to sign up for Social Security beginning at age 62. But for each month you file for benefits ahead of FRA, they get reduced.

You can also delay your filing past FRA. For each month you do, your benefits get a boost, up until the age of 70.

However, if you’re sitting on a large nest egg, you have some choices. You may decide to claim benefits as early as possible so you get that money sooner. Maybe you’ll use it to travel freely or sublet an apartment in a bustling city you’ve always wanted to experience. If filing for Social Security allows you to meet certain retirement goals, it’s worth doing.

On the other hand, if you have enough savings to pay your living costs and travel or meet different goals, then you may take the attitude that you might as well leave your benefits alone and let them grow. In that case, you could file for Social Security at FRA or even beyond if not having that money isn’t stopping you in any way. From there, you’ll have a larger monthly benefit to enjoy for life, and if you don’t need it yourself, you could give it to your grandchildren or even donate it to a cause that’s important to you.

Weigh your choices — without the pressure

The upside of entering retirement with a loaded IRA or 401(k) is not having to sweat your Social Security filing decision so much. Sure, it’s still important to put some thought into it. But know that if you have a large amount of savings, you’re really in a situation where there’s no such thing as choosing the wrong filing age.

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