Social Security has been a huge source of financial support for Americans since it was first enacted back in 1935. Right now, you must be at least 62 years old to be eligible for benefits. From there, you can claim benefits at any time up until age 70, but the age you choose to start claiming them determines the amount you’ll receive each month.
Generally, it’s best to wait as long as possible to claim your Social Security benefits. That’s because the longer you wait, the more money you’ll receive. The Social Security Administration encourages this by offering incentives to those who wait to claim. Right now, Social Security benefits increase 8% per year until you reach 70. So, how can you support yourself in the meantime?
1. Draw from 401(k)s, IRAs and annuities first.
First, you need to figure out how to create a sustainable income stream. If you’ve planned for retirement, you’ve probably contributed to a 401(k) or IRA account during your working years. If you’re looking to retire before 70 but want to delay claiming benefits, consider drawing money from these accounts or any annuities you may have.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
This allows you to support yourself without needing to rely on Social Security right away, but it works only if you’ve adequately planned for your retirement and have saved enough money.
2. Push back your retirement a few years.
It's no secret that Americans are living longer, and that means your retirement could last longer than you think. According to the American Psychological Association, one out of every four adults who are 65 today will live past age 90. One in seven will live until at least 95. With this in mind, you may want to consider pushing back your retirement a few years if you want to delay claiming benefits.
This doesn’t mean you need to be 70 to retire, and it certainly doesn’t mean you need to jeopardize your health in doing so, but delaying retirement a couple of years allows you to continue saving. If your circumstances allow, working just a couple of years longer can help you become more financially stable in the long run.
3. If you’re married, claim benefits at different times.
There’s another strategy for delaying benefits that applies specifically to married couples. If you and your spouse are both eligible to claim Social Security, whoever earns the least amount in benefits should claim first. Doing this allows you to earn supplemental income while maximizing your returns. Remember, the longer you wait to claim, the more money you’ll receive.
Applying this strategy to the spouse with higher earnings allows you to maximize the benefits you’ll receive each month. By claiming one at a time, with the highest-earning spouse claiming last, you can maximize your wealth and increase financial stability and security.
If you’re planning to delay claiming Social Security benefits, it’s still important that you enroll in Medicare coverage as soon as you become eligible. The federal health insurance program is available to all Americans who are at least 65. If you don’t, your coverage could cost more.
Waiting to claim benefits is a great strategy, but it doesn’t work for everyone. Those with extenuating health concerns or limited savings should consider claiming benefits as needed. After all, it is a supplemental aid that is meant to provide financial support in retirement.
However, if you’re in a place to delay claiming Social Security, it’s not a bad move to make because it allows you to maximize the benefits you’ve spent your working years paying into.
Before making any final decisions, consider consulting with a financial adviser who can help you figure out the best option for your financial situation.
Patrick Simasko is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Simasko Law is a separate entity and not affiliated with CoreCap Advisors. The information provided here is not tax, investment or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
Related Content
-
Why Uber Stock Is Volatile After GM's Cruise AnnouncementUber stock is swinging this week following news that General Motors is restructuring its Cruise unit. Here's what you need to know.
-
UnitedHealth Stock Falls as Lawmakers Eye Insurers, PBMsUnitedHealth stock is continuing to fall Thursday after the introduction of bipartisan legislation targeting PBMs and healthcare giants. Here's what to know.
-
Three Possible Tax Impacts for Retirees Under TrumpHow might a second Trump term affect your tax bill in retirement — or the inheritance tax bill for your heirs? This pro has three predictions.
-
What to Know About Leverage and Bitcoin's Meteoric RiseLeverage in the financial world can lead to astonishing success or a crushing collapse. How are investors using leverage to invest in bitcoin?
-
How Do You Know When It's Time to Change Financial Advisers?Sometimes a breakup is for the best. Here's how to handle 'the talk' and make the switch to a new professional who's a better fit for you.
-
The Best Ways to Use Your Year-End Bonus (and the Worst)'National Lampoon's Christmas Vacation' shouldn't be anyone's go-to for financial advice, but it does remind us how not to spend a holiday bonus.
-
LLCs: Power Tools That Can Create Big ProblemsForming an LLC for your business might seem like a straightforward endeavor, but if you don't know exactly what you're doing, trouble could follow.
-
Never Talk About Money? For Women, That Can Spell DisasterHow can you plan for retirement when your husband holds the purse strings and talking about money is taboo? Help is at hand for this common problem for women.
-
How Combining Your Home Equity and IRA Can Supercharge Your RetirementWhile many retirees own an IRA and a home, very few are considering how they could work together in a plan for retirement income.
-
The Six Estate Planning Steps Every Blended Family Must TakeWhether your blended family is newly formed or fully fledged, use these six steps to review your estate plans now and lower the risk of conflict in the future.
