Even if you happen to save nicely for retirement, you might still find that you become heavily dependent on Social Security once your paycheck from work goes away. And that’s why it’s important to get the most out of your benefits. With that in mind, here are some potential Social Security filing strategies for you to explore.
1. Delay your filing as long as possible
You’re entitled to your complete monthly Social Security benefit based on your wage history once you reach full retirement age (FRA). FRA is either 66, 67, or somewhere in between, depending on your year of birth.
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You’re allowed to sign up for Social Security beginning at age 62, but doing so will shrink your monthly benefit on a permanent basis. On the flip side, if you delay your filing past FRA, your benefits will grow 8% a year up until age 70. And whatever boost you lock in will be permanent.
Even if your nest egg is nice and robust, it pays to consider delaying Social Security until age 70 if you don’t need the money sooner. While it’s possible that you’ll end up depleting your savings in your lifetime, Social Security is guaranteed to pay you a monthly benefit for the rest of your days. So the higher that benefit is, the more financial security you get.
2. File on time while your spouse grows their benefit
If both you and your spouse are entitled to benefits but your spouse is the higher earner, one thing you may want to do is file at FRA yourself while your spouse delays their claim until age 70. By signing up for Social Security at age 66 or 67 (or somewhere in the middle), you might generate enough income for your household so as not to have to delay retirement too long.
From there, your spouse can delay their filing so you can both share that higher monthly benefit once it starts rolling in. And if your spouse is older than you, this strategy makes even more sense, because if they pass away first, it could leave you with a higher survivor’s benefit.
3. File early and invest your benefits
Claiming Social Security early is risky, because it could mean winding up cash-strapped later on in retirement. But if you’re a shrewd investor and you plan to put that money to work rather than spend it, then you could come out ahead financially.
To be clear, this strategy won’t work out for everyone. Filing for Social Security early means losing up to 6.67% a year in benefits compared to waiting until FRA. But if you’re confident you can generate a higher return than that by investing, then the numbers may end up working out in your favor.
Claiming Social Security isn’t something you should do on a whim. Instead, make sure to put a fair amount of thought into your filing approach. Doing so could spell the difference between a financially sound retirement and a rocky one.
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