3 Reasons You Should Wait to Get Social Security | Business news

Should you access Social Security benefits as soon as possible or wait to try to maximize your monthly benefits? Everyone’s situation is a little different, but there are some really good reasons to delay using your benefits.

Let’s look at the top three reasons for delaying Social Security benefits until age 70.

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1. You have a high life expectancy

Your life expectancy is a big factor in this decision. There are two main components to consider:

  1. Your current health status.
  2. Longevity of your family.

If you’re in good health and your family lived into their 80s and 90s, then it probably makes sense to maximize your monthly payments by waiting until age 70 to claim Social Security.

Average lossless the threshold for waiting until age 70 to receive benefits is age 81 (assuming a full retirement age from 67). The break-even point is the age you need to live to make the wait worthwhile.

In other words, as long as you expect to live to age 81, you’ll receive more total benefits. Larger but smaller checks will outweigh the smaller but larger checks you would have received if you had filed earlier.

It’s also important because your health care costs after age 80 are likely to be higher, so the extra income can make a big difference.

2. You plan to continue working

Many Americans plan to continue working past normal retirement age. A 2021 survey by Cision found that nearly 33% of American seniors plan to continue working into their 70s.

As life expectancy continues to rise, it is likely that many more Americans plan to work into their 60s. In this case, it makes a lot of sense to delay your Social Security benefits until age 70, because your benefits may be penalized by continuing to work.

If you have not reached full retirement age, the Social Security Administration deducts $1 for every $2 of your annual income that exceeds $19,560. The threshold is $51,960 if you reach full retirement age that year, and the deduction is $1 for every $3 of earnings. Also, you could pay higher taxes on your Social Security benefits after yours temporary income will be higher while you are still working.

Although there are times that it may make sense to take Social security while you’re still working, generally speaking, you’re better off waiting until you’re fully retired or at least earning less than $19,560 to claim benefits.

3. You don’t need extra income

In my opinion, the #1 reason to get Social Security early is because you need the income. But if you don’t need the extra income to continue living comfortably, it may be better to delay your benefits.

If you have properly planned for retirement, you will likely have enough monthly income from your retirement accounts, such as your 401(k), pensionor Mouth of the IRA to cover your expenses and desired lifestyle.

If so, you should almost certainly wait until age 70 to maximize your monthly payments (assuming you have a long life expectancy). In the end, you could get almost 60% more money each month by waiting (assuming full retirement age is $1,500, the benefit at age 62 would be 30% less, or $1,050. The benefit at age 70 would be 120% or $1,800, so $1,050/ $1,800 = 58%).

As your life slows down, this extra monthly income will provide security and peace of mind so you can focus on doing the things that matter most to you instead of worrying about your finances.

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