The decision to sign up for Social Security is not an easy one to make because the filing age you land on dictates how much monthly income you ultimately collect during your senior years. You are entitled to your full monthly benefit based on your personal income history when you reach full retirement age, or FROM, which is either 66, 67 or somewhere in between, depending on your year of birth. However, you are allowed to claim benefits as early as age 62 or postpone your application to age 70. The latter feature increases your benefits by 8% per year, so it’s an appealing consideration – especially if these circumstances apply to you.
1. You will not be fired from your job
Many seniors are forced to retire earlier than planned, and the unfortunate reality is that if you lose your job later in life, you may struggle to find another one. However, if your employer is willing to hold on to you and you are able to continue working until age 70, make it possible to delay your benefits until that time and thereby let them grow.
2. Your health is good
As a general rule, it pays to require social security on the early side if your health is not good and you do not expect to live a long life. While you lower your benefits monthly, you get a higher lifetime benefit if you enroll in Social Security in the early 60s and pass away 10 years later. But on the flip side, if your health is in top shape and you are likely to live a long life, filing benefits at 70 will not just give you more money on a monthly basis; it will probably also result in a higher lifetime benefit.
3. You do not have much money saved in an IRA or 401 (k)
Social security should not be your only source of income in retirement. But if you are approaching your senior years and you have missed the boat by contributing steadily to a dedicated retirement plan, then this is a great way to compensate for increasing your benefits by claiming them at age 70. Social security only replaces approx. 40% of your pre-pension if you are an average employee. If you wait 70 years to sign up and increase your benefits in the process, you will replace more of your previous income, thereby reducing your chances of struggling with a financial shortage.
What can a major increase in social security do for you?
The more money you collect from social security, the more comfortable you are retired. Remember, the increase you hang on to delaying your filing remains in effect in life, so it pays to consider requiring Social Security at 70 if this option is available.
To illustrate the impact that may have, we must imagine that you are entitled to a monthly benefit of $ 1,500 to an FRA of 67. Each year you delay your filing, it will result in a higher benefit until you maximizes $ 1,860 $. It is a significant boost to lock inside.
That said, you can try to persevere for a year or two instead if you can not manage to delay your filing all the way up to 70 years. Any waiting time will have an impact, and one that can make your retirement a lot more enjoyable.