When it comes to Social Security benefits, timing is everything. While you can start claiming benefits as early as age 62, delaying until age 70 can significantly boost your monthly payments. But the question is: Can you afford to wait?
At Brogan Financial, we believe that making informed decisions about your Social Security benefits is crucial to your overall financial wellness. Let’s dive into the pros and cons of delaying benefits and explore strategies to make it work for you.
The Power of Patience: Why Delaying Can Pay Off
Delaying your Social Security benefits until age 70 can be a game-changer for your retirement income. Here’s why:
- Bigger Monthly Checks: For every year you delay beyond your full retirement age (which varies depending on your birth year), your benefits increase by about 8%. That means if you wait until 70, you could receive up to 32% more than if you claimed at your full retirement age.
- Inflation Protection: Social Security benefits come with built-in cost-of-living adjustments. A larger initial benefit means larger increases over time, helping to protect your purchasing power against inflation.
- Longevity Protection: If you live well into your 80s or 90s, those larger checks can provide a significant financial cushion in your later years.
The Cost of Waiting: What to Consider
While the benefits of delaying are clear, it’s not the right choice for everyone. Here are some factors to consider:
- Your Health: If you have health concerns or a family history of shorter lifespans, claiming earlier might make more sense.
- Your Savings: You’ll need enough savings or other income sources to bridge the gap until age 70.
- Your Employment Status: If you’re still working, delaying benefits can be easier. But if you’re unemployed or underemployed, you might need to claim earlier.
- Your Spouse’s Situation: If you’re married, coordinating your claiming strategy with your spouse can maximize your household’s total benefits, both now and when one spouse passes away
Strategies to Make Delaying Work for You
If you’re considering delaying benefits but aren’t sure how to make it work financially, consider these strategies:
- Work Longer: Even part-time work can help bridge the gap and potentially increase your future benefits.
- Tap Other Retirement Accounts: Consider drawing from your 401(k) or IRA to cover expenses while delaying Social Security.
- Reduce Expenses: Look for ways to cut costs in the short term to enable long-term gain.
- Consider an income ladder. Setting aside money for stable income in the first 5 years of retirement can help during market volatility.
The Bottom Line: It’s Personal
The decision to delay Social Security benefits is highly personal and depends on your unique financial situation, health, and retirement goals. While the potential for larger lifetime benefits is appealing, it’s crucial to consider whether you can afford to wait and if it aligns with your overall retirement strategy.
At Brogan Financial, we’re committed to helping you navigate these complex decisions. Our team of experienced advisors can help you analyze your specific situation and develop a personalized strategy that optimizes your Social Security benefits and supports your long-term financial wellness.
Remember, there’s no one-size-fits-all answer. The key is to make an informed decision based on your individual circumstances and goals.
Work With Us
Ready to explore whether delaying Social Security benefits is the right move for you? Schedule a consultation with one of our expert advisors at Brogan Financial. We’ll help you crunch the numbers, consider all your options, and create a comprehensive retirement plan that aligns with your unique needs and aspirations.
Don’t leave your Social Security strategy to chance. Let’s work together to maximize your benefits and secure your financial future.
For more retirement planning insights and financial tips, tune in to ‘More Living with Jim Brogan’ every Saturday morning at 9 on 98.7 FM WOKI.
