For most retirees, Social Security benefits are a significant part of their income strategy. In fact, Social Security accounts for roughly 40% of all retirement benefits in the U.S. The issue that most retirees face, however (and one that I am often called upon to help with in an advisory role with my clients) is determining how to maximize these payments to help sustain them through their golden years.
Recently, I shared my insights and experiences on this topic with The Street to discuss what retirees and those nearing retirement can do to help maximize those benefits. As I discuss in the article and so often convey to my clients, one of the most important and effective ways to do this is to delay the receipt of your Social Security benefits. Taking social security earlier can result in as much as a 25% reduction in monthly income compared to waiting until age 70. Every family is different, but, for many, tapping other resources first is the best option. Unfortunately, around two-thirds of all people elect to begin receiving benefits at age 62, when they first become eligible. If you can delay even a few years, however, the payoff can be significant. There are several ways to delay drawing benefits. To quote myself from The Street: “A 401(k), investments and other retirement accounts may be better used if they bridge the gap between retirement and a later start to Social Security.”
Married couples should approach this issue in an especially cautious, collaborative and strategic manner. In many cases, couple may need to time their individual retirements differently in order to maximize their long-term benefits. As the article points out, a good Social Security calculator (many of which can be found online) or a talk with a qualified financial professional can help retirees and pre-retirees determine how the timing of when they begin to receive their benefits will impact their finances.
Read this and other recent media coverage on my “In the News” page.