As you approach retirement, the decisions become more complex. Whether to stay in your home or downsize, when to take withdrawals from your 401(k) or IRA, and most importantly, when to start claiming Social Security.
The Age to Start: 62 or Beyond?
The earliest age you can begin claiming Social Security is 62. This is a common choice for many seniors who prefer to access their benefits as soon as possible.
However, it’s crucial to know that if you claim Social Security before reaching full retirement age (which is 67 for anyone born in 1960 or later), your monthly benefits will be permanently reduced.
Delaying Benefits: The Financial Upside
On the other hand, delaying Social Security past your full retirement age brings with it an 8% increase in benefits for each year you wait. This increase, however, is permanent, making it a tempting choice for some.
Why Age 70 Is the Cutoff
While you can technically claim Social Security any time after 62, waiting past age 70 doesn’t bring additional benefits. The delayed retirement credits stop accumulating at age 70, and there’s no financial advantage to waiting any longer.
If you file for Social Security after 70, you forfeit up to six months of retroactive benefits. If you’re planning on waiting beyond 70, you’ll be missing out on that benefit without any advantage in return.
Considerations When Claiming at Age 70
While claiming Social Security at 70 might seem ideal due to the larger payments, it may not always be the best choice. If you don’t live long enough to reach the break-even point, you could end up with a smaller total payout compared to someone who filed earlier.
Those with health concerns or a family history of shorter lifespans might want to consider claiming earlier than age 70.
The Hidden $23,760 Bonus
Most people don’t realize the potential for additional benefits that could give them up to $23,760 more each year in Social Security. Maximizing these lesser-known strategies can make a big difference in retirement income, ensuring financial stability in your later years.
Social Security decisions are deeply personal, and while the 70-age rule might seem appealing, it’s important to assess your health, family history, and financial needs before making the decision.
