In many cases, it is financially beneficial to wait until age 70 to start collecting Social Security benefits. Delaying your first checkup can lead to: deferred pension credits if you wait until after you full retirement age (FRA), not to mention avoiding early filing penalties that come up if you file a claim before reaching FRA.
But there is no one-size-fits-all approach when it comes to Social Security. And in some circumstances, you may even be better off applying for benefits as early as possible. In fact, there is one specific situation where waiting to claim benefits would never make sense and would always leave you in a worse financial position.
In this situation, you will regret delaying your Social Security application
The only situation where you absolutely must claim Social Security before age 70 is when not if you do this, you will be forced to rely too much on your pension.
Suppose, for example, that you are unable to continue working for various reasons, such as the need to care for a family member, a health problem of your own, or the difficulty of finding a job later in life. If you no longer receive a regular salary, you will still have to pay for major expenses such as food, housing, transportation and health care.
If you qualify for Social Security but decide not to take it in this situation because you hope to maximize your monthly benefits, you will need to rely on other sources of income. And if you don’t have a pension, rental income, or other funds, you’ll need to call on your savings.
While you expect to withdraw money from your savings after you leave the workforce, the key is to maintain a safe withdrawal rate, and that means not being able to withdraw too much money at once. By doing this, you decrease your invested balance and reduce the potential future return. If you take out more than you should and your balance drops too quickly, there is a big risk that you will run out of money later in life.
For most people, retreat 4% of their account balance every year (or less) is the best way to ensure your savings don’t run out, but a problem arises when that isn’t enough to cover your expenses.
The reality is that in this situation you are much better off claiming Social Security as early as possible (assuming you can’t find another option to generate the extra income you need). If you don’t take that step and rely on excessive withdrawals of your savings, your nest is more likely to hit the road, leaving you to rely on it only on Social Security benefits when that happens. And since these benefits typically only replace 40% of pre-retirement income, that would be a huge problem for most retirees.
You won’t be able to easily rebuild your savings once you’ve used it up, and it’s much better to give it up. additional social security benefits associated with a delayed claim than putting yourself in a situation where you are completely dependent on those benefit checks later in life.
So if you’re at risk of making excessive withdrawals from your savings, don’t hesitate to call Social Security as soon as possible to avoid future problems, even if that means starting your benefits well before you turn 70. reached your birthday.
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