Maximizing Your Social Security Benefits: Why Delaying Makes Sense
Are you considering when to claim your Social Security retirement benefits? While some may be tempted to claim early, experts agree that delaying can lead to higher benefits in the long run. Here at Extreme Investor Network, we believe in providing you with valuable information to help you make informed decisions about your personal finances. Let’s delve into why delaying your Social Security benefits may be the best strategy for you.
Waiting Pays Off
It’s important to note that in order to receive 100% of the benefits you’ve earned, you need to wait until your full retirement age, which typically falls between 66 and 67, depending on your date of birth. However, waiting until age 70 to claim can result in even higher benefits for retirees.
According to David Blanchett, head of retirement research at Prudential Financial, delaying claiming Social Security is one of the safest strategies you can implement to protect yourself financially over time.
Investing in the Market vs. Social Security
Some individuals may argue that investing in the market, particularly in an S&P index fund, can yield higher returns compared to delaying Social Security benefits. While the market may offer potential gains, it also comes with risks. Blanchett’s research shows that waiting until age 70 to claim can result in benefits that are 77% higher than claiming at age 62. Additionally, for every year you delay from full retirement age, you may receive an 8% benefit boost.
Experts suggest comparing the trade-off of delaying Social Security with investing in bonds rather than equities, as Social Security benefits are adjusted for inflation and provide income for the rest of your life.
Passing on Money to Heirs
Some individuals may want to claim Social Security early in order to withdraw less from their 401(k) and leave more for their heirs. While this may seem like a sound strategy, it’s important to consider factors such as longevity and taxes when planning your retirement income. Delaying Social Security can not only help preserve your standard of living in later years but also create a more tax-efficient retirement overall.
Break-Even Age Consideration
Many people focus on the “break-even age” when deciding whether to claim Social Security early or delay. While this can be a useful reference point, experts advise looking at your entire financial situation rather than just one metric. Factors such as your own longevity and the financial resources of both you and your spouse, if applicable, should also be considered in making a claiming decision.
At Extreme Investor Network, we believe in empowering individuals to make informed decisions about their finances. Delaying your Social Security benefits may be a smart move to ensure a comfortable retirement and maximize your benefits. For more personalized advice and strategies tailored to your financial goals, be sure to connect with one of our expert advisors today.