For Mark Roberts’ Use: Most of us understand that Social Security will comprise an important part of our retirement plan. On the other hand, we also know that we can’t count on Social Security payments to provide for all of our income in retirement. The program is meant to be a supplement to your income only. So you might make the mistake of thinking that the timing of your claim doesn’t matter too much. Others know that delaying their claim can help them reap a considerably larger check, so they plan to wait until age 70 to do so.
There are problems with both lines of thinking. Since it’s “only a supplement”, you might be tempted to go ahead and claim your benefits too early, when you could have waited and received larger monthly checks for life. On the other hand, assuming that you can wait until age 70 might backfire too. It’s a great plan, but what if you need to retire sooner? Have you banked too much on those “large” payments, and neglected your own retirement savings?
Let’s see what other retirees have decided to do. According to Social Security statistics from 2016, current beneficiaries first filed their claims at the following ages:
- 34.5% of men and 39.7% of women claimed their benefits at age 62
- 22.4% of men and 23.8% of women filed their claims between age 63 and 65
- 33.9% of men and 27.5 % of women filed at age 66
- 7.1% of men and 5.7% of women claimed benefits between ages 67 and 69
- 2% of men and 3.3% of women were able to wait until age 70
As you can see, more people are filing for their benefits earlier, and then those numbers tend to decrease with age. So the first thing to remember is that while waiting as long as possible might help you reap a larger check, it doesn’t seem as though that plan is actually working out for a lot of people.
The second thing to remember is that since you might need to file for your Social Security benefits earlier than you had expected, it’s a good idea to make a contingency plan for your income. When you make a retirement income plan, consider the fact that you might need to retire and/or claim Social Security earlier than expected.
We can help you do the math, and decide upon the ideal time to retire and claim your benefits. But of course, life can throw us curve balls at times. That’s why regular consultations with a financial planner are important. Give us a call, and we can review your retirement plan and help you decide what to do if you need to switch to Plan B.