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Social security is the main source of income for millions of pensioners. It is therefore essential to define a ranking strategy if you want to make the most of your services. The difficulty is that unlike Medicare, which starts at age 65, you have eight years to qualify for social security, which starts at age 62 and ends at age 70. Well, technically, you do not have to file can wait longer than that, but there is no financial incentive to do so.
You are eligible to receive your full monthly benefits based on your previous earnings when you reach the retirement age. This age is 66, 67 or 66 years old and a specific number of months, depending on your year of birth.
If you start receiving benefits earlier than the retirement age, you will lose some of these payments, the size of which will depend on how quickly you file. The maximum reduction you will face, however, is 30%, which would come into play if you retire at age 62 while your retirement age is 67.
SOURCE OF IMAGE: GETTY IMAGES.
It is also possible to not claim benefits after the retirement age. Every year that you wait, you accumulate deferred retirement credits that increase your benefits by 8% per year, up to the age of 70 (which is why age 70 is generally considered as age most recent).
Many financial experts recommend waiting until age 70 to receive the benefits. In this way, you benefit from a guaranteed boost that remains in effect for the rest of your life. Plus, with older people living longer, this income increase puts less pressure on your budget and gives you more financial flexibility later in life. But while this is good advice in theory, it does not always stand up in practice.
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Why not wait until age 70 to claim social security
When many people plan to maximize their social security benefits, they do so every month. But in reality, your goal should be to make the most of Social Security on a lifetime base, and if you do not expect to live very long, postponing benefits makes no sense.
How can you know how long you will live? You can not. But you can evaluate your likelihood of living a longer life compared to a shorter life by evaluating several things.
The first is your health. If you are overweight in retirement, if you have several known health problems and if you maintain harmful habits such as smoking, your chances of living up to age 80 are lower than those of a weight -healthy, known health problems and never as much as taking a cigarette.
The second factor to evaluate is your family history. Did your parents live for a long time? What about their parents? And how is the health of your brothers and sisters? All these points will give you some indication of how long you are likely to live, even if it is not an exact number. And if the age range you are on is relatively young, then applying for social security at age 70 is actually a bad idea because if you were able to increase your benefits monthly you could lose for life.
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Imagine that you are entitled to a monthly benefit of $ 1,600 at the age of retirement at age 67. Waiting until 70 will bring you $ 384 more per month, which may seem like a good thing. But here's the problem: if you only live up to 77 years, you will actually lose more than $ 25,000 in Social Security income by depositing at 70 vs. 67. In fact, in this scenario, it is profitable to deposit as soon as possible, at age 62, because despite your reduction in monthly benefits, you will have a lifetime income of $ 9,600 higher than you would get by filing your return on time at age 67 .
Let's be clear: claiming social security at age 70 makes sense for many people. But if that's your plan, make sure it really makes sense to you.
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