A new retirement date necessitates a thorough review of your financial goals, including the age at which you will elect to file for Social Security. Delaying benefits for a while can occasionally have some real benefits, especially if you don’t immediately need them.
However, there are times when waiting doesn’t make sense. Here is what you need to know to choose your best course of action.
when it makes sense to put off taking Social Security and retiring
People primarily want to postpone Social Security in order to increase their monthly checks, at least until they reach their maximum benefit at age 70. However, many people are unable to wait because they are unable to do so; they depend on their monthly benefits to help with household expenses. You’ll have a paycheck to help with the bills if you decide to put off retirement as well, and you might be able to delay receiving Social Security benefits for a while longer.
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You might be able to avoid the program’s earnings test by delaying Social Security. Only those who are working and receiving benefits before reaching full retirement age are impacted by this (FRA). For workers today, that translates to 66–67.
The Social Security Administration withholds $1 from your check for every $2 you make over $19,560 in 2022 if you’ll be under your FRA for the entire year. If you reach your FRA this year—and only if you do so before your birthday—you only lose $1 for every $3 you earn over $51,960.
The government recalculates your Social Security benefit once you reach your FRA, taking the money it had previously withheld into account. That will slightly increase your future checks. However, you probably won’t get as much as you would have if you had simply delayed receiving benefits.
Therefore, if you decide to postpone retirement in order to maximize your Social Security benefit, it may be a good idea to wait to submit your application until you have officially retired, or at the very least, until you have reached your FRA. This will prevent the government from deducting money from your checks.
when to put off retiring but not delaying Social Security
Delaying retirement may be done out of personal preference or for financial reasons. As long as you qualify for the program, there is nothing stopping you from claiming Social Security while working.
If you don’t anticipate living a long life, applying for benefits while working might be a wise decision. In this situation, delaying Social Security rarely makes sense; by choosing to do so, you run the risk of waiting too long and not receiving any benefits before you pass away.
If you want to start your transition into retirement but are unable to afford to completely leave your job, delaying retirement but not Social Security may make sense. You could reduce your working hours to have more free time and supplement your income with benefit checks.
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In this case, there is no blatant right or wrong response. However, it’s worthwhile to try out a few different scenarios and decide which one you like best. Reviewing your Social Security plans can help you understand how they fit into your current retirement strategy, even if you decide not to make any changes. This will allow you to determine how much you will need to save on your own to cover your expenses.
Most retirees completely ignore the $18,984 Social Security bonus.
If you’re like the majority of Americans, your retirement savings are a few years (or more) behind. However, a few obscure “Social Security secrets” may be able to increase your retirement income. One simple trick, for instance, could increase your income by up to $18,984 a year! We believe that once you understand how to maximize your Social Security benefits, you will be able to retire with the assurance and peace of mind that we all seek. To find out how to learn more about these tactics, just click here.
