Many older Americans end up becoming financially dependent on Social Security to stay afloat. In fact, a lot of people rush to file for benefits early just to get that money as quickly as possible, even though doing so means reducing their benefits for life.
But what if you’re a wealthy retiree who doesn’t need Social Security? Maybe you were fortunate enough to earn a high income throughout your career, and maybe your investments paid off in a very big way. If you’re sitting on, say, an $8 million nest egg, then you probably don’t need Social Security income to live comfortably as a senior.
So should you forgo your benefits in that situation? Or should you sign up to get the money you’re entitled to?
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A very personal choice
The Social Security Administration (SSA) will never force you to sign up for benefits. In fact, Social Security recipients can boost their benefits by delaying their filings past full retirement age, but come age 70, benefits can’t grow any longer.
In spite of this, the SSA won’t automatically sign eligible recipients up to receive benefits. Anyone who doesn’t file at age 70, but rather, opts to wait, will potentially lose out on income they would’ve otherwise been entitled to.
Now if you’re in a strong enough financial position where Social Security really won’t make an ounce of a difference in your life, you may decide to let the program keep its money. And that’s certainly not a bad call.
Social Security is facing a major revenue shortfall in the coming years. And unless lawmakers intervene with a fix, benefit cuts could be on the horizon. Those cuts, however, could be catastrophic for many of the millions of seniors who rely heavily on Social Security today.
Of course, letting Social Security keep your money won’t really make a dent in the program’s revenue crisis. But if enough wealthy seniors opt to forgo benefits, it could make a difference and add up.
On the other hand, if you paid into Social Security all your life, you’re entitled to collect money from it once you’re older. And that’s not something to feel bad about just because you’re wealthy.
While there may be people out there who need Social Security more than you, that doesn’t mean you have to give up the benefits you’ve earned. And if you really feel bad about it, you could always take the money you receive from Social Security and donate it to the charity of your choice.
Also, while you may not care so much about getting Social Security, your spouse might feel differently. And if your spouse never worked, they may be eligible for Social Security spousal benefits based on your earnings record. In that scenario, however, your spouse can’t file for benefits until you do. And if you never sign up, your spouse won’t get a dime.
No right or wrong answers
Someone who’s financially comfortable may not be reliant on a spare $20 to make ends meet. But if they see a $20 bill lying in the street, chances are, they’ll scoop it up and spend it on something.
Similarly, if you’re wealthy and therefore don’t need Social Security to get by in retirement, you’d be perfectly justified in signing up for benefits anyway. If you choose not to, so be it. But at the end of the day, there’s no right or wrong path to take in this situation.
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