Giving up eight years of checks may result in you having more money in the end.
As a retiree, every dollar matters since you no longer have a paycheck to rely on. However, if you want to maximize the amount of money coming into your household each month, it may make sense to forgo eight full years of Social Security payments.
Forgoing retirement checks for years may sound insane, but it might benefit you in many ways.
Why would you want to forgo eight years of earnings?
So why would you choose to forgo eight years of Social Security benefits that you are entitled to? The rationale is straightforward.
When you reach 62, you can begin receiving Social Security benefits. However, those advantages rise each year you wait until you get to 70. And the rise is significant. That’s because Social Security constructed its formula so that those who claim benefits at an early age receive more checks, but each one is smaller. On the other hand, people who postpone will receive substantially larger payouts later in life. By forgoing their checks from 62 to 70, the average senior with an average benefit might end up with over $900 extra each month.
A larger monthly check can make a tremendous difference in your capacity to make ends meet later in life when your savings are usually running out. But that’s not the only advantage of deferring your Social Security claim. By postponing your claim, you may have a higher lifetime income and a higher monthly income.
Waiting provides you the best chance of receiving greater lifetime benefits since the benefits formula was meant to balance the money received by early and late filers – but it was devised when life expectancies were shorter. With higher life expectancy rates in current times, you may end up with so many larger checks when you claim them at 70.
Delaying the commencement of your payouts until 70 increases your check size, which benefits your spouse if you were the bigger earner and died before. Because Social Security survivor benefits allow your widow(er) to keep the greater of the two payments flowing into your household, your spouse will be better off. If you forgo eight years of Social Security to increase your monthly payout, your partner will be entitled to the much bigger check you earned after you die.
How do you know if filing a delayed benefits claim is suitable for you?
As you can see, there are three compelling reasons to postpone Social Security: A higher monthly benefit, a better probability of maximizing lifetime income, and a better capacity to care for a lower-earning spouse.
However, there are some drawbacks, the most prominent being that you will lose out on many benefits that you could have gotten, and you’ll have to figure out how to sustain yourself without Social Security until you reach 70.
However, unless you’re unmarried and have health issues, or you’re a lower-earning spouse claiming early to allow a higher-earning spouse to wait, the advantage of delaying your benefits claim may outweigh the disadvantages, and delaying the start of your Social Security benefits may be your best option.
Contact Information:
Email: [email protected]
Phone: 9568933225
Bio:
Rick Viader is a Federal Retirement Consultant that uses proven strategies to help federal employees achieve their financial goals and make sure they receive all the benefits they worked so hard to achieve.
In helping federal employees, Rick has seen the need to offer retirement plan coaching where Human Resources departments either could not or were not able to assist. For almost 14 years, Rick has specialized in using federal government benefits and retirement systems to maximize retirement incomes.
His goals are to guide federal employees to achieve their financial goals while maximizing their retirement incomes.
