Anyone with grandkids has heard the desperate refrain, “Are we there yet?”
As you draw near the age of 65, you may be saying the same thing regarding your retirement benefits. After all, you’ve worked hard for many years and drawing from Social Security seems like a much-deserved right of passage.
Proceed With Caution
Did you realize, though, that the value of Social Security could increase as much as 8 percent for each year that you delay drawing from Uncle Sam? That’s worth considering, especially in a lackluster market where savings accounts are lucky to earn a fraction of that return.
Healthy individuals who are approaching the 65 mark likely have many years ahead of enjoyable retirement. If you are in that group, when it comes to your standard of living, it is probably worth trying to postpone drawing from Social Security for as long as possible. Simply stated, the longer you are able to delay, the more your nest egg will increase in value.
Why wait? If you begin drawing from Social Security at age 62—young by social security standards—you will take home 20 percent less than if you were to begin drawing at age 65. Even better: if you hold off until you are 70, your retirement will be worth 20 percent MORE. The bottom line is that every year you delay drawing on your benefit, you could earn 8 percent more.
Back when the official retirement ages were set, folks weren’t living as long as we do now. Since then, we’ve seen dramatic improvement in technology and medical advances. Today, it’s not uncommon for folks to live well into their 90s. If you are enjoying the fruits of good health, I strongly encourage you to delay pulling from your Social Security benefits for as long as possible. Doing so will allow you to reap the rewards of a higher income at a time when you may need it most.
Let’s face it, the cost of living continues to increase. Unfortunately, Social Security isn’t able to keep up. By delaying it for even a few years, you can improve the value of this fund that you’ve worked so hard to build over your lifetime.
To learn more specifics about delaying your Social Security, read more here: http://www.ssa.gov/retire2/delayret.htm
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage.