Is it still smart to postpone social benefits?
Is it still smart to postpone social benefits?

Is it still smart to postpone social benefits?

While preparing for retirement, one of the biggest decisions you will have to make is what age you will start requiring Social Security benefits.

The earliest you can apply for benefits is 62 years old, but if you delay that age, you will receive larger checks each month.

Previously, most experts recommended postponing benefits until age 70 to collect the highest monthly payments. But is it still the right move for most retirees? Here’s what you need to know.

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The case of suspension of benefits

The age you apply for social security is a personal decision and it will ultimately depend on your unique situation. That said, in some cases it may be wise to defer benefits.

The best reason to consider deferring benefits is that it will increase your monthly income. By waiting up to 70 years to apply for benefits, you can receive up to 32% more each month than if you had claimed your full retirement age (FROM). It can amount to hundreds of dollars a month, which can go a long way if the money is tight in retirement.

Let’s say, for example, you have a 67-year-old FRA, and by claiming that age, you will receive $ 1,500 a month. If you were to claim 62, your benefit amount would be reduced by 30%, giving you $ 1,050 a month. However, wait until you are 70 years old to submit an application and you will receive a 24% bonus, giving you a total of $ 1,860 per month.

Keep in mind that your overall benefits in theory should be roughly the same over a lifetime, no matter what age you submit. By claiming earlier, each check will be smaller, but you have accumulated several of them over the course of a lifetime. If you delay benefits, you will not receive as many checks, but each one will be larger. But if your goal is to maximize yours monthly income, deferring benefits could be a smart move.

Why it may be better to demand early

While it may be a good decision for some people to defer benefits, there are plenty of reasons to consider claiming in the past.

For example, it will give you more time to enjoy your pension. You do not necessarily have to retire and claim benefits at the same time, but they often go hand in hand. Not everyone wants to wait until their 70s to retire, and by claiming earlier, you can get a kickstart on retirement when you are still young and healthy.

Claiming benefits in the past could be particularly smart if you are struggling with health issues or have reason to believe that you will live a shorter than average life expectancy. Again, you should theoretically receive the same amount over a lifetime, no matter when you make claims. However, these calculations assume an average service life. If you are facing health issues, you could potentially collect more in total if you make claims earlier.

Finally, life is unpredictable and you never know what curveballs it might throw at you. If you are planning to postpone the benefits but then start experiencing health issues, for example, you may regret that you have waited so long to apply.

What age should you require?

Before making claims, consider factors such as your financial situation, your health and how you plan to spend your pension.

If you have one robust pension fund and you are planning to enjoy an active pension, for example, it may make sense to make claims as early as possible. On the other hand, if it is important to increase your monthly income, you may want to consider deferring benefits to earn bigger checks.

There are no right or wrong answers when it comes to choosing an age to apply for social security. But by weighing all your options and considering your unique situation, it becomes easier to report at the right age for you.

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