3 Reasons to Delay Your Social Security Benefits


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If you're thinking about waiting past full retirement age to start receiving Social Security benefits, here are three good reasons why that may be a reasonable option:
•You're still working -- especially if you haven't reached 35 years of earnings.
•You expect to live a long time beyond the average Social Security recipient.
•The guaranteed 8% per-year benefit hike from waiting is more appealing to you than the potentially higher returns of letting your investments compound longer by supplementing with Social Security sooner.

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  • Chart from the Social Security Administration: http://www.ssa.gov/pubs/EN-05-10147.pdf

    http://www.ssa.gov/pubs/EN-05-10084.pdf for data on spouse & dependent benefits
  • http://www.forbes.com/sites/janetnovack/2011/02/15/the-big-decision-when-to-take-social-security/ “While those benefit amounts sound dramatically different, in theory the system is neutral—meaning if you live to an average age, you’ll end up with roughly the same total benefit no matter when you claim.”
  • http://www.ssa.gov/planners/taxes.htm
    http://www.ssa.gov/retire2/whileworking.htm “You can work while you receive Social Security retirement (or survivors) benefits. When you do, it could mean a higher benefit for you in the future. Higher benefits can be important to you later in life and increase the future benefit amounts your family and your survivors could receive. ”

    Original image location: http://pixabay.com/en/agent-business-call-center-18707/

    http://www.ssa.gov/retire2/delayret.htm : 8% for people born in 1943 or later. Since people born in 1943 are all 70+ now, the only people that the choice matters to are those in the 8% group
  • Original image location: http://pixabay.com/en/resting-old-man-human-bench-50442/
  • Found via google images search for “bar chart growth.” Image source: http://pixabay.com/en/achievement-bar-business-chart-18134/
  • Chart from the Social Security Administration: http://www.ssa.gov/pubs/EN-05-10147.pdf
  • Image source: http://pixabay.com/en/rehabilitation-gang-floor-111391/
  • Image source: http://pixabay.com/en/fortune-telling-glass-ball-239176/
  • 3 Reasons to Delay Your Social Security Benefits

    1. 1. 3 Reasons to Delay Your Social Security
    2. 2. You have a choice on when to take Social SecurityYou can start any time from age 62 to 70. Source: Social Security Administration. There are trade-offs: • The older you are when you start, the higher your monthly benefit amount -- but you’ll likely receive benefits for a shorter period of time. • Once you pass away, your benefits generally stop (though your spouse and qualifying dependents may be able to keep collecting on your earnings record).
    3. 3. Your life, your benefits, your choice • Regardless of when you choose to receive Social Security benefits, on average, recipients receive the same gross payouts over the course of their lifetimes. • That doesn’t mean your choice is completely neutral based on the age you start receiving benefits. • In the next few slides, you’ll see three good reasons to consider putting off your Social Security benefits beyond your full retirement age.
    4. 4. No. 1: You’re still working • If you have other sources of income, up to 85% of your Social Security payment gets taxed. • Once you start taking Social Security, your benefit is generally “locked,” though you will get credit for future wages that could increase your benefit. • Each year you delay taking your Social Security benefit past your full retirement age (up to age 70) adds 8% to your yearly benefit amount. • Your Social Security check is based on your highest 35 years of wages. If you still have zero-income or low-income years on your record, working longer can provide a nice bump. Source: pixabay.com
    5. 5. No. 2: You expect to have a long retirement • If you have a good reason to believe you will exceed the average life expectancy, delaying your benefits could provide you more over your lifetime than starting sooner. • Of course, none of us really know when our time is up. If you pass away sooner than you expected, your lifetime benefits could be lowered by waiting. Source: pixabay.com.
    6. 6. No. 3: You’re not comfortable investing Source: pixabay.com. • If you’re retired, your key sources of income are your pension (if you get one), your Social Security, and the money you earn from your investments. • Money you receive from Social Security is money you don’t have to take out of your investments to cover your costs of living. By waiting (up to age 70), the larger your monthly Social Security check, and the less you need your investments to cover once you start collecting. • Additionally, while the potential returns are higher in the market, the market carries no guarantees. On the flip side, the key risk in Social Security is that benefit cuts could occur if the trust fund runs dry.
    7. 7. Is there a downside? Delaying Social Security (up to age 70) may seem like a good idea, but remember… • If you start later, you have to cover your costs of living until then from some other source. • If you pass away sooner than you anticipate, the money Social Security saved by not paying you remains in Social Security’s control, rather than being passed to your heirs. Source: Social Security Administration.
    8. 8. Don’t forget the other risks of aging • The farther into retirement we get, the less mobile and independent we generally become. • Delaying gratification for the sake of a larger Social Security check does you little good if you’re not able to enjoy the benefits of that larger monthly check. Source: pixabay.com
    9. 9. How accurate is your crystal ball? • The choice of whether to delay your Social Security benefit depends on many factors. • Key ones you’ll need to consider: • How long you expect to live and be able to make use of the larger checks. • How you’ll cover your costs during the window between when you can collect and when you do collect. • Whether your investments are better helped from more time to compound or more supplemental income from a larger Social Security check. • Just remember that if you do delay, the benefits of waiting stop at age 70.Source: pixabay.com.
    10. 10. How to Get Even More Income During Retirement