Should I File for Social Security Now or Later?

A Reverse Mortgage Credit Line Loan Can Help You Wait to Start Your Social Security Benefits, here is an Informative Article from Schwab Investments:

Start with a few basic facts about Social Security

Even though most people are eligible to collect Social Security at age 62, their benefit will continue to increase between 6 and 7 percent for every year they delay up to their "full retirement age" (FRA). Your FRA is between ages 66-67 depending on your birthday. After that, it will increase by 8 percent every year between FRA and age 70, at which time it maxes out. As a rough example, a monthly benefit of $1,000 at age 62 would increase to approximately $1,760 by age 70.

In other words, if you file early, you’ll have extra income in your 60’s but your benefits will be permanently reduced. If you wait, you’ll likely enjoy a higher inflation-adjusted floor of income into your 70’s, 80’s, and possibly beyond.

Then assess your current financial situation

Conscientious retirement planning takes time and attention to detail. Most people will benefit from consulting a financial planner before they make a major decision such as the optimal time to file for Social Security. But whether you decide to work with a professional or not, you’ll need to start by having a complete up-to-date understanding of your total financial picture—including the amount and composition of the resources (pension, 401(k), IRA, brokerage accounts, part-time work, home equity, etc.) you can draw upon in retirement.

This exercise is crucial because it will show you not only how much money you’ll be able to safely withdraw from your various accounts over your anticipated retirement, but also whether that amount is sufficient to support your lifestyle—and allow you to postpone filing for Social Security.

Not all investments are the same

Digging a little deeper, your asset allocation, investment holdings and drawdown strategy also come into play. The more conservative your investments, and the lower your expected rate of return, the more it may make sense to delay filing for Social Security. Conversely, the higher the expected rate of return of your investments, the more it may make sense to hold on to your investments and claim early. Of course, aggressive investments may or may not ultimately pay off, so you have to weigh the balance between risk and return and carefully assess your ability to withstand downturns.

That being said, the situations in which delaying claiming Social Security works best—unexpected longevity, high inflation, and poor market returns—are the same scenarios in which many investments tend to struggle, and why Social Security is better viewed as a form of insurance than an investment.

Think about your health and family

Another important factor is your health and anticipated longevity. Clearly the longer you live, and the more years you have to collect a higher benefit, the more sense it makes to delay filing for Social Security. On the other hand, if you're in poor health, you may be wise to take benefits earlier.

Also consider your family. Once you file, your spouse age 62 or older and dependent children under age 18 may also qualify to receive a portion of your Social Security benefit based on your record. If you predecease your spouse, they're eligible to collect on your Social Security benefit. In this case, delaying filing will typically provide a larger benefit for your survivors.

Put the pieces together

As you can see, finding the optimal time to file for Social Security is a complex decision. To summarize, here are a few things to think about:

  1. Consider delaying if you can afford to wait and if you're in good health and anticipate a long life.
  2. Consider claiming early if you don’t have the financial resources to wait, or if you anticipate shorter than average longevity.
  3. Factor in the expected return of your asset allocation, your appetite for investment risk and desire for guaranteed income.
  4. Be mindful of how your timing can impact spousal and family benefits.

A crucial decision

There's no question that retirement can be one of the most fulfilling times in our lives. But at the same time, making sure you have the financial security to enjoy these years requires a lot of thought and preparation. So take your time. You don’t have to file for Social Security right away. Instead, talk to a financial planner who can help you integrate Social Security into your retirement plan, examining various “what if’s” and the impact of different claiming and withdrawal strategies. You’ll be glad you did.

===Grass Valley Local ! Sierra Foothills Revere Mortgage and Shawna McDonald, Reverse Mortgage Loan Officer, 13 year specialization solely in reverse mortgage loans, successfully having completed hundreds of them. Representing 11 of the largest reverse mortgage lenders; get great rates & local, personalized service in person, in Grass Valley, from loan start to finish. Visit my website Available by confirmed appointment in my downtown Grass Valley office or by phone (530) 497-3010 NMLS #271335 | CalDRE #00585530 Zying Mortgage Inc. Company NMLS 76801 |Company CalDRE # 014461===