Social Security commonly serves as an important income source for seniors, namely because those benefits are a guaranteed source of income for life. That’s why it’s so important to file for Social Security carefully.
You’re allowed to sign up for Social Security as soon as you turn 62. But you won’t get your full monthly benefit based on your personal wage history until you reach full retirement age, or FRA. FRA is 67 if you were born in 1960 or later.
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You can also delay your Social Security claim past FRA, all the while boosting your benefits in the process. That incentive runs out at age 70, but between then and FRA, your monthly benefits will get a permanent 8% boost for each year you delay your filing.
Now you’ll often hear that filing for Social Security at age 70, or at any point beyond FRA, will mean running the risk of shorting yourself on lifetime income. That’s because in exchange for those higher monthly payments, you’ll have to wait longer to get them. And if you don’t end up living a very long time, a delayed filing could easily result in you getting less total income from Social Security.
But there’s another risk to delaying Social Security that may not be on your radar. And it’s one you need to give careful thought to as well.
When a delayed filing prevents you from meeting your retirement goals
Many people plug away at their jobs for years on end and postpone big goals of theirs until retirement, like traveling. If you delay your Social Security filing for too many years, though, you might miss out on those opportunities.
Let’s say you’ve always dreamed of spending six months in Europe hiking. You may have the energy and stamina to pull that off at age 65. But what if you delay your Social Security filing until age 70 and keep working all the while, only to find that come 70, your health has declined? Suddenly, you’re in a position where you have the time and money to do the one thing you’ve always wanted to — but your body won’t cooperate.
That’s why you really need to consider what you’ll be giving up by delaying your Social Security claim. If it’s just access to those benefits a little bit sooner, then you may want to hold off on Social Security to lock in higher payments, especially if you have reason to believe you have a decent lifespan ahead of you.
But if delaying Social Security also means having to delay retirement on a whole, that’s a different story. And one thing you don’t want to do is postpone your workforce exit only to end up unable to do the things you’ve always wanted to.
There are certain situations where holding off on Social Security absolutely makes sense. And you may decide that a delayed filing is the right choice for you. Just make sure to look at that decision from every angle before finalizing it.
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1 Comment
What is the FRA for those of us born before 1960? And how would that birth timeframe change your article’s main points?