What is the right age to sign up for Social Security? This is a question many people ask themselves, especially as retirement approaches.
That you get a choice in your Social Security Filing age is actually a bit of a mixed case because it can make your decision difficult. If you require services at your exact full retirement age (OFF), you get your full benefit based on your earnings history. If you sign up at age 62you want to cut back on your monthly benefit, but get your money faster – and possibly retire sooner.
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You can also delay your submission beyond OFF. For every year you do this, your benefit increases by 8% up to 70 years.
It is not easy to wait any longer to charge for social security. But here’s the reason why you might want to go that route – even though it may be a challenge.
It’s all about guaranteed income
Ideally, you should retire with a decent chunk of cash in an IRA or 401 (k) plan. However, the size of the monthly income that your savings will provide depends on various factors, including how well your investments are performing. And unfortunately, there is no guarantee that they will do well.
On the other hand, if you delay your application for social security past FRA, you are guaranteed an increase of 8% to your benefits for each year you endure. That boost will not depend on stock market performance or circumstances beyond your control. And that guarantee could make the wait worthwhile.
Of course, not everyone has the opportunity to delay a social security claim. Some people are forced out of a job earlier in life due to layoffs or health issues. However, if you are able to continue working, it can really pay off in the long run to wait to apply for social security. Not only can it give you more financial flexibility in retirement, but it can also give you some much needed peace of mind.
Keep in mind that if it seems too difficult to wait until age 70 to claim social security, you can always sign up for benefits at age 68 or 69. Doing so will still increase that income stream significantly, leaving you with with a higher monthly salary for life.
What is the right call?
You may spend a lot of time considering your decision to file for Social Security. But no matter what age you land on, be sure to consider the benefits of a guaranteed boost to your benefits.
It can be especially worthwhile to think about postponing your application if you retire with a nest egg that is not as robust as you would like it to be. A higher social security benefit can help compensate for the lower monthly withdrawals you will be left with due to the lack of savings.
Finally, you can consider postponing Social Security if your health is excellent in the years leading up to retirement and you are sure you will live a long life. In that scenario, you will probably not only come out with a higher monthly benefit, but also a higher one lifetime advantage.
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