While everyone should start planning for and saving for their retirement as soon as possible, the reality is that, even if you started investing wisely and putting money away years ago, it’s at the age of around 60 when retirement finances become less of an abstract idea and more of a reality. The urgency and immediacy of you and your family’s economic circumstances around this time is one of the reasons why many wealth management professionals refer to the ages of 60 to 62 as the “sweet spot” for making decisions about social security benefits. It is an age when no one has yet filed for social security, but also a time when you probably have a pretty good idea about what you want (and need) your retirement nest egg to look like.
For people in the “sweet spot”, even if they are not yet ready to retire, they are receptive to learning about the various strategies and scenarios regarding their social security benefits. More and more these days, I am talking to these folks about the wisdom of waiting as long as possible to claim their social security benefits. Because social security is essentially an annuity (that is larger if you wait until the age of 70 to claim your benefits), using other assets to delay your claim as long as possible makes sense: basically, by doing so, you are buying yourself more (and inflation-protected!) income.
I read a great breakdown recently that pointed out just how big of a benefit it can be to wait to make your claim: for someone retiring at age 62, delaying your benefits until age 64 will allow your portfolio to last one year longer; delaying until the age of 66, four years longer; the age of 68, seven years longer; and the age of 70, ten years longer! More reason than ever to use your time in the “sweet spot” wisely.