One of the strongest potential steps for creating more retirement income, is waiting until you reach age 70 to file for Social Security.
A U.S. News and World Report article, How to Delay Claiming Social Security Until Age 70, has valuable information, including that you may want to consider spending down other accounts before you file for Social Security.
For example, you may be able to utilize a 401(k) or IRA while waiting for Social Security.
Review Your Other Options
Savings and investment accounts are often accessible for several years before filing for Social Security at age 70.
If you do take advantage of another account, you should only take what you need, because overspending may weaken the power of waiting for Social Security.
Work with your financial services professional to review your cash reserves and accessible savings accounts. Remember, prior to retirement, you should have enough cash to cover at least one year of spending. This cash may allow you to cover some of your essential expenses without withdrawing money from other investments before filing for Social Security.
And during the conversation with your financial services professional, be sure to discuss CD and bond interest, money from dividend paying stocks, and possibly selling appreciated assets that you’ve kept for more than a year if any of these apply to your financial strategy.
Consider Annuities
Annuities may be another opportunity for supplemental income. Annuities are contracts with insurance companies that may provide guaranteed lifetime income in exchange for a lump sum payment. While there are many types of annuities, you’ll need cash at the outset for a contract.
You may be able to structure annuity payments for the years between your retirement date and your 70th birthday. If you want to retire at 55, you may be able to utilize a 15-year fixed period certain annuity.
But annuities aren’t a good option for everyone. And because there are many different types of annuities, determining which is right for you can be hard. Therefore, if you’re considering an annuity, consult with your financial services professional.
Stay On the Job
If you’re in good health and enjoy your career, why stop? Working beyond age 65 may help you secure your ideal retirement lifestyle. And remember that your peak earning years are often shortly before retirement.
So, working an extra year or two may not only help you earn delayed retirement credits for Social Security but may also help you increase what you have in your retirement accounts.
Go Smaller
Downsizing your home is still another way you may be able to hold off until you’re 70 to begin receiving Social Security. Are you an empty nester with a four-or five-bedroom home? Selling and moving into something smaller but that still meets your needs, may give you a large amount of cash while also saving you money on taxes, upkeep, and utilities.
Currently, the tax liability exclusion for a primary residence is $500,000 for married couples and $250,000 for an individual.
Factor Spouse's Payment
As you contemplate your “making it to age 70 Social Security strategy,” you may also want to analyze your spouse’s likely monthly payment. If you’re both eligible for Social Security payments, first factor whose benefit will be larger. From there, one possible strategy may be to begin taking the smaller benefit immediately while delaying the larger payment.
Furthermore, the survivor benefit allows the spouse who lives longest to receive the bigger of the two monthly payments.
We are not affiliated with, or endorsed by the Social Security Administration or any government agency.
SOURCES