How might delaying your Social Security benefit help you?

social securityMany people take Social Security too soon because of many different reasons. If you can structure your retirement just a bit differently, delaying Social Security leads to higher benefits once you do start.

For some, delaying is not an option because they didn’t save enough for retirement to begin with – and thus Social Security becomes the safety net as it was designed. Premature disability, injury or job loss before retirement often leads to tapping retirement resources sooner than planned.

One method for early resource use is to use retirement savings to “bridge” the gap you would have received from Social Security for those few years until your Social Security benefit is higher. The concept here is that you use some retirement resources early for a few years, and those get replaced by the higher Social Security benefit for a much longer period of time – a period more and more people are likely to live beyond because we are living longer.

Both of the short blogs below illustrate how delaying pays off in the long run. I encourage you to read them. You don’t need to get bogged down in detail … your goal is to grasp the concept that there are alternative options instead of grabbing Social Security money as soon as you can. Often, that is not in your long term interest. For couples, the higher survivor benefit that results from delaying when benefits start may be crucial. And divorcees may also improve their lifelong benefits through proper strategy and claiming design.  Your future self will be glad you delayed, regardless of current status.

Delaying Social Security: What an Investment! by Wade Pfau

How Delaying Social Security Can Be The Best Long-Term Investment Or Annuity Money Can Buy by Michael Kitces

PS. If you’ve already started Social Security benefits, and feel like that may have been in error, you can stop your benefits after reaching Full Retirement Age and then restart the benefits later – at a higher benefit amount!

About Larry Frank, Sr.

Larry R Frank Sr., MBA, CFP®, is an experienced financial advisor and a published author on Retirement Planning Research. Have a financial question? Click Here to Ask Larry

5 Responses to How might delaying your Social Security benefit help you?

  1. Larry Frank, Sr. February 10, 2015 at 2:30 pm #

    Social Security and re-marriage. How does getting remarried effect benefits? Here’s an example:

    http://adviceiq.com/content/social-security-remarriage

  2. Larry Frank, Sr. April 8, 2015 at 1:22 pm #

    The value of Social Security from an asset point of view (what it may take to replace the benefit)

    https://www.kitces.com/blog/valuing-social-security-benefits-as-an-asset-on-the-household-balance-sheet/

  3. Larry Frank, Sr. April 9, 2015 at 10:29 am #

    Also related to the above comment I made on the 8th, here’s a study that shows that people actually have a hard time valuing what their benefits may be worth compared to actuarial values:

    http://crr.bc.edu/wp-content/uploads/2015/03/IB_15-6.pdf

  4. Stevie April 26, 2016 at 2:14 pm #

    Add favorable tax treatment, as noted by Scott Burns and others. Enlarging ratio of SS to other income may lower SS taxation within that 0 and 85% band (which will worsen as thresholds aren’t inflation indexed). Plus most states don’t tax SS. Could lower taxes several thousand dollars per year by delaying from 62 to 70.

    https://assetbuilder.com/knowledge-center/articles/scott-burns/social_security_benefits_and_the_single_taxpayer

    As the table shows, layering less other income on top of more social security is taxed lower than layering more other income on top of less social security.

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