At full retirement age (FRA), you are entitled to your maximum monthly Social Security benefits based on your work history. If you were born after 1960, eligibility begins at age 67.
You are not required to enroll in Social Security at FRA. If you are willing to accept a reduced monthly benefit for the rest of your life, you can apply for benefits earlier and receive your money sooner. Alternately, you can delay your application beyond FRA and secure a higher monthly benefit for life.
At age 70, it is no longer beneficial to defer Social Security because your monthly benefit cannot increase. However, if your FRA is 67, you may be able to increase your monthly payment by up to 24%, depending on how long you’re willing to wait.
Benefits of Delaying Social Security Benefits
Now, delaying Social Security means working longer for some individuals. And that is not desirable. However, here are a few ways in which a delayed filing could benefit your retirement.
You’ll have more disposable income for recreation
Here’s a bombshell regarding retirement: It can be tedious. If you are accustomed to working 40 or more hours per week and then become unemployed, you may struggle with too much idleness.
By delaying your claim and thereby increasing your monthly benefit, you will have more options for spending money on leisure activities. That could make your retirement far more enjoyable.
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You will have additional funds for healthcare
According to Fidelity, the average couple departing at age 65 may require $315,000 for healthcare expenditures in retirement. And this number is based on data from 2022. Given that the cost of healthcare tends to increase over time, it is reasonable to infer that Fidelity’s 2023 estimates will be even higher.
By delaying Social Security, you will have more money for essential expenses such as healthcare. This could prevent you from skimping on medication or denying yourself treatment due to a lack of funds.
You will have additional funds for long-term care
Many seniors wind up requiring some form of long-term care. Even if you only wind up paying for it for one year, the price could be exorbitant.
According to Genworth, which sells long-term care insurance, the annual cost of residing in an assisted-living facility is on average $54,000. A private apartment in a nursing facility may cost twice as much.
Ideally, you will purchase long-term care insurance to offset your expenses. However, having a higher benefit to offset your expenses could also be very useful.
The greater your monthly income, the greater your financial flexibility. It really is that easy. Consider what a few hundred dollars per month for the remainder of your life could do for you if you’re approaching retirement and unsure of when to apply for benefits.
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