One of the biggest decisions retirees face is when to start taking Social Security benefits. Even professional opinions run the gamut from “take it early so you can enjoy retirement while you’re still in good health,” to “wait as long as you possibly can,” to “don’t even think about touching it until you turn 70.”
So which one is the right choice for you?
You may not be surprised to hear that waiting until you’re 70 may be most beneficial. A recent report from Capital One and United Income back up this claim with real, hard data.
Here is what the report found:
- Retirees who waited to take Social Security benefits until age 70 would enjoy about a 9 percent increase in their total expected future income.
- The average household would see an annual income increase of about $3,400 per year.
- Over their lifetime, retirees who start taking Social Security too soon lose more than $110,000 in benefits that they otherwise could have received, had they waited until age 70 to start collecting.
These are some significant numbers!
Let’s say you waited until 70 to start Social Security. What would be your trade-off?
The report suggests that, for those who delay their benefits, overall wealth would almost certainly decrease during their 60s and 70s.
This means that, in order to cash in later, your wealth must take a short-term dip.
Is potential future gain worth short-term financial loss?
The answer to that question may depend on a few factors.
First, how is your health? Does your family have a history of terminal illness or early death? If you’re in poor health or you have a family history of premature death, taking Social Security earlier may be the best choice.
Also, what kind of savings have you accumulated for retirement? If you have a nice-sized investment account, you may not worry about the short-term money struggle of delaying Social Security benefits. You could live off of your investments until your benefits kicked in at 70. This is where having a comprehensive income drawdown strategy, which includes the timing of when you take Social Security is a must.
Have you decided what your best Social Security strategy is? Are you struggling with trying to make sense of it all? If you’d like to get a second opinion, click here to set up a no-cost, no-obligation meeting with one of our financial advisors.