With the looming threat of Social Security benefits being cut by 27% in a decade, it is now more important than ever to ensure you maximize your Social Security benefits. This means using strategies and planning ahead to make sure you are getting the most out of your Social Security benefits. Taking the time to understand your options and strategies available can help you get the most out of your retirement savings.
According to a recent report from the system’s trustees, Social Security’s trust fund will be depleted in 2033 – a year earlier than previously predicted. This news is concerning, as it means that the government will no longer be able to pay out full benefits to retirees and other beneficiaries of Social Security. The report highlights the need for action to ensure that Social Security remains financially viable for future generations. While it is essential that policy makers take steps now to address this looming problem so that retirees can continue to receive their promised benefits in the years ahead, the impetus also falls upon the receiver of benefits to ensure that they maximize their benefits.
For those considering retirement, the age at which they choose to claim their Social Security benefits can have a significant impact on the amount of money they will receive. Claiming at 62 brings a roughly 30% reduction in benefits compared with what a retiree would get if they waited until 67. But those who can wait even a few years past 62 will receive a higher benefit, as long as they do not exceed 70. This is because Social Security benefits are calculated based on an individual’s life expectancy and the age at which they begin to collect them. Therefore, waiting even just a few years can result in significantly higher monthly payments for retirees throughout their retirement years.
For many retirees, the financial bridge between retirement and Social Security benefits is a difficult one to cross. But using your 401(k) or other retirement savings as a stop-gap can be an effective strategy for making sure you have enough money to live on while you wait to claim your Social Security benefits.
Retirement is a time of financial planning and security, but it can be difficult to plan for the long-term when inflation is always a concern. This is especially true for people who are in excellent financial health, exercise and eat right. In this case, it makes sense to wait to get benefits as long as possible in order to maximize the amount of money received from Social Security and other retirement plans over the course of their lifetime. However, retirees must also consider longevity risk – the possibility that they will outlive their savings – which can be a real threat if they don’t plan ahead.
Here at Infinium, we use an industry-leading financial planning tool that optimizes when to take Social Security. Most of our clients will benefit from delaying until age 70, but not all of them. The key here is to invest the time into completing your own financial plan, and updating it regularly with us. Your ability to optimize your outcomes rests on thoughtful and accurate analysis of your personal financial situation and we stand ready to help you in that effort, particularly when it comes to making the best decision on your Social Security.