As we welcome a new year, a whole new group of people is about to reach the age of 62 (a significant milestone for those with one eye on Social Security!). At the same time, those born in 1955 will finally reach FRA (full retirement age). But, before you make any big decisions, you should ask one question:
Can I wait?
For those who wait to start claiming Social Security, they are normally rewarded handsomely. Why? Because the monthly benefit you receive increases every single year until you hit the age of 70. Even after FRA, this 8% per year makes a huge difference to your comfort in retirement. By claiming before FRA, you permanently reduce the monthly benefit.
Whether you’re reaching FRA or turning 62, we encourage you to reconsider immediately claiming Social Security. Just because you can claim, it doesn’t mean you should. By waiting, you increase the monthly benefit for when you eventually do start claiming.
We know, waiting to start receiving an important source of income is easier said than done. However, some can achieve it by staying at work for longer. Of course, your ability to do this all depends on your employer and health status. If you still enjoy work, this is a great excuse to continue.
Don’t worry; there are other options for those who want to stop full-time work. Perhaps you can rely on a 401(k), IRA, pension, or a part-time job for income rather than Social Security?
Before Claiming, Ask the Important Question
Before claiming at these two important ages (and in between), ask whether you can wait. For every year you wait, your potential monthly benefit from Social Security increases by 8%. Often, we see workers claim their Social Security and then leave money in a 401(k) or IRA. But this is the wrong way around. Instead, you should leave your money in the vehicle guaranteed to grow, which is Social Security.
If you can wait, the extra money you receive per month could just come in handy if you live beyond life expectancy. Of course, it’s always good to speak to a financial professional before making huge financial decisions for retirement. With a simple move like waiting to claim Social Security, you could just enjoy a healthier retirement.