Are you close to retirement?
These days there are very few retirees that can “fully retire” on Social Security income alone. Still, that does not mean you are not looking forward to the little extra cushion that SSA benefits can provide. But before you count on that monthly check or direct deposit, remember that all financial advisers say it’s best to delay when you claim Social Security Benefits as long as possible.
You can elect to start taking your SSA benefits as soon as you become eligible at age 62. However, for most retirees, that is rarely a good move. If you delay until the age of 70, you’ll raise the size of your check substantially for each year that you wait. There is one really big, important reason why it makes sense for most retirees to do so, and here’s why.
Very few people, except for the extremely wealthy, can count on their saved money to last them throughout retirement. That means that most retirees rely on two sources of income. Those two sources are their Social Security benefits and any returns on their investments. However, returns on investment are not a guarantee. Your SSA benefits are your only hedge against rising costs and expenses due to inflation.
Is Social Security a sure thing?
Despite politicians painting pictures of gloom and doom, and the dangers of Social Security “running dry,” the truth is Social Security is a sure thing. Social security is perhaps the only guaranteed income any retiree can count on. Even though benefits are not exactly keeping pace with inflation, there really is no doubt about whether these benefits will be there for future retirees. Cutting Social Security benefits is the third rail of politics that no lawmaker really will ever want to touch.
It’s impossible to predict exactly how long you’re going to live. It is also difficult to predict whether your investment account will be large enough to provide enough money for life. So, it just makes sense that you do all you can to maximize your sole source of guaranteed lifetime income. And, that means when you claim your Social Security should be delayed as long as possible.
If you claim benefits early, you could shrink your check by as much as 30% compared with if you start taking them at full retirement age. After all, if your savings does run short, or your investments tank, and you end up relying on Social Security as your only – or main – source of income, you’re going to be a lot better off if those guaranteed lifetime checks are as big as possible!