The decision to sign up for Social Security should not be taken lightly. That’s because your filing age determines how much money you end up raising each month.
If you claim social security with your full retirement age, or FRA, you get the exact monthly benefit your earnings history is entitled to. Applying for benefits ahead of FRA will result in a cut, while deferring benefits beyond FRA will result in a boost — and a potentially generous one, too.
In fact, if you stop claiming Social Security until age 70, that’s when deferred pension credits When you stop accruing, you increase your benefit by 24% to 32%, depending on your FRA. And that increase lasts for the rest of your life. That, in turn, could make it easier to cover these expensive retirement costs.
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Many people retire when their mortgage has already been paid off. Despite this, a large number of seniors struggle to keep up with the cost of home ownership. That’s because expenses like property taxes, insurance, and maintenance never go away.
In addition, as they age, homes require more repairs. They can be expensive – especially if you can no longer easily do them yourself. A higher monthly benefit can make your housing costs less taxing. And a more robust benefit could also mean the difference between being able to stay in your home and having to reduce.
2. Owning a car
If you live in an area with no public transportation, you may need a private car when you retire. But you may have to pay a lot for it.
AAA estimates that the average cost of owning a vehicle is $805.50 per month. If you’re concerned that a car will put a huge strain on your nest egg, then delaying your Social Security application to receive a higher benefit can really help in that regard.
►Social security is there when you retire: But you still need savings
It is estimated that today the average 65-year-old opposite-sex couple $300,000 on health care in retirement, according to Fidelity. Reading between the lines, if you retire with known health problems or develop problems as you get older, your bills could end up getting even higher.
If you have not reserved money for medical costs in a health savings account, it really pays to consider deferring your Social Security application. A higher monthly benefit can make your health care costs easier to manage.
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An income increase can be a lifeline
Many seniors retire expecting to spend much less on living expenses than they did while on the job, only to realize their bills are largely the same. If you have the option to delay your Social Security application until age 70, it may pay to sit still and wait to apply. Having a guaranteed higher monthly benefit can save you as a senior a world of financial stress – and also allow you to enjoy the freedom that retirement has to offer.
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