How to Avoid Taking Social Security Early: Expert-Recommended Options

How to Avoid Taking Social Security Early: Expert-Recommended Options

Follow Us

In recent years, the rising cost of living and economic uncertainty have made many people in the U.S. reconsider when to take their Social Security benefits. While it might seem tempting to access these benefits early, financial experts warn that doing so could result in significant long-term losses, affecting retirement security.

However, there are several strategies that can help delay Social Security withdrawals, allowing you to maintain the full value of your benefits.

Why Delaying Social Security Matters

Taking Social Security before reaching your full retirement age (usually between 66 and 67) can result in a reduction of your monthly payments by up to 30%. On the other hand, waiting until you turn 70 to start collecting benefits can increase your payments by 8% each year after your full retirement age.

Delaying Social Security can therefore offer long-term financial benefits, making it worth exploring options to avoid early withdrawals.

Practical Strategies to Delay Social Security

Financial experts shared several strategies with CBS News that can help you delay your Social Security benefits while still maintaining financial stability during retirement.

1. Use Personal Savings and Emergency Funds

If you’ve been able to save money over the years, now is the time to use it. Drawing from a high-yield savings account or a money market fund can help bridge the gap between early retirement and the ideal time to start Social Security benefits.

These accounts are easily accessible and relatively safe, making them a good option for short-term financial needs.

2. Use a Roth IRA

Roth IRAs allow you to withdraw money tax-free and without penalties after the age of 59. By using a Roth IRA to cover retirement expenses, you can preserve your other tax-deferred accounts and allow your Social Security benefits to grow in the meantime.

3. Part-Time Jobs or Freelancing

Working part-time or freelancing during retirement can provide you with extra income. Many retirees find consulting, remote work, or part-time jobs in their local area to be both financially rewarding and personally fulfilling. This additional income can help you delay taking your Social Security benefits.

4. Laddered CDs or Bond Ladders

Building a CD or bond ladder involves arranging several certificates of deposit (CDs) or bonds to ensure a steady stream of income over time. This method allows you to receive regular interest payments without having to touch your Social Security benefits too early.

5. Consider Home Equity

If you own a home, you may want to explore options such as downsizing or taking out a reverse mortgage. These options can provide additional income, but it’s important to consult with a financial expert to ensure that this is a good long-term strategy for your situation.

Thinking Ahead for a Stronger Retirement

Delaying Social Security benefits is not just about receiving a bigger monthly check; it’s part of a broader retirement plan. Financial planner Taylor Kovar shared with CBS News that “the longer you can delay, the better off you typically are in terms of lifetime income.”

Ultimately, whether to delay taking Social Security depends on personal factors like health, life expectancy, and financial needs. With careful planning and strategic choices, it is possible to ensure a more comfortable and financially secure retirement without rushing into early withdrawals.

Delaying Social Security may seem like a small decision, but it can have a lasting impact on your financial future. By using smart strategies and considering your personal circumstances, you can make the most of your retirement savings and enjoy a more stable, worry-free retirement.

SOURCE

Leave a Comment