Can You Afford to Delay Your Social Security?
Social Security is one of the most important sources of income for retirees, but deciding when to claim benefits can be a complex decision. Many people wonder whether it’s better to take benefits as soon as they are eligible or to delay them for a larger monthly payment. While delaying Social Security can increase your lifetime benefits, it’s essential to consider whether your finances and personal circumstances support waiting.
How Delaying Social Security Works
Social Security benefits are based on your earnings history and the age at which you claim. The earliest you can claim is age 62, but doing so reduces your monthly benefit. Waiting until full retirement age (usually between 66 and 67) allows you to receive your full benefit. Delaying beyond full retirement age up to age 70 increases your monthly payment by approximately 8% per year.
While these increased benefits can provide valuable financial security, delaying may not be suitable for everyone.
Factors to Consider Before Delaying
1. Current Income Needs
If you need Social Security to cover living expenses, delaying benefits may not be feasible. Carefully reviewing your budget and other retirement income sources—pensions, savings, annuities, or part-time work—helps determine whether you can afford to wait.
2. Health and Longevity
Life expectancy is a key factor. If you are in good health and have a family history of longevity, delaying benefits may result in higher lifetime income. Conversely, if your health is uncertain, claiming earlier might make more sense to ensure you receive the benefits you need.
3. Spousal Benefits
For married couples, delaying Social Security can also affect spousal benefits. A higher-earning spouse who delays may increase the survivor benefit, providing more income for the surviving spouse. Coordination between spouses is crucial to maximize household benefits.
4. Tax Considerations
Social Security may be taxable depending on your overall income. Delaying benefits could change the timing of taxes, potentially reducing your overall tax burden or altering the interaction with withdrawals from retirement accounts.
5. Inflation Protection
Social Security includes cost-of-living adjustments (COLAs), which help benefits keep pace with inflation. Delaying benefits increases the base amount, so future COLAs apply to a higher monthly payment, enhancing long-term purchasing power.
The Role of a Retirement Planner
Determining the best time to claim Social Security involves more than simple calculations. A retirement planner can help you:
Analyze your current and projected expenses
Consider life expectancy and health factors
Evaluate how claiming age affects spousal benefits
Plan withdrawals from retirement accounts to optimize taxes
Create a strategy that balances income needs with long-term security
By reviewing your personal financial picture, a retirement planner ensures your decision is aligned with your goals and lifestyle.
Final Thoughts
Delaying Social Security can be a powerful tool to increase lifetime income, but it isn’t the right choice for everyone. Assessing your finances, health, and retirement goals is essential before making this decision. Careful planning ensures that you maximize your benefits without creating financial strain.
At Sound Retirement Solutions, our retirement planners help you evaluate the right time to claim Social Security based on your individual situation. Contact us today to create a strategy that strengthens your retirement income and gives you confidence in your financial future.
