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Carla Fried: Inflation is more reason to delay taking Social Security

Carla Fried, Rate.com on

Published in Business News

Still, fewer than 10% of men or women are waiting until age 70 to start, which is when you would lock in the biggest possible impact of delayed credits that have been inflation adjusted.

How to wait until age 70 to start Social Security

It’s important to note that for married couples, what matters most is that the highest earner delays until age 70. When a spouse dies, the survivor is entitled to one benefit, not both. This means that every surviving spouse will encounter a drop in income.

The goal is to minimize the size of that income hit. And the best way to do that is to make sure the highest earner waits to collect the highest possible benefit. That ensures that regardless of who survives, that person will get the biggest possible benefit.

If you have retirement savings in a 401(k) or individual retirement account (IRA), research suggests you’ll be financially better off using those savings in your 60s, rather than starting your Social Security benefit early.

 

Another option is to reframe working in your 60s. It may not be desirable — or practical — to keep at a full-blown career job. But might there be an opportunity to work part time, to earn just enough (after-tax) to offset the Social Security benefit you won’t receive if you wait?

Take a spin through the Social Security’s benefit estimator and check out your expected monthly benefit at age 62. Now ask yourself if there’s work to be had that could pull in at least that much. Given the average benefit (across all ages) is around $1,500, you’re likely looking at replacing less than you earn working full time.

And if the thought of downsizing is something you’ve got in the back of your mind, maybe it’s time to move it to the front. The home that was great for raising your family may not have an age-in-place friendly layout, or it could be socially isolating.

Making a move sooner is going to be a lot easier than being pushed to change in your 80s. The first $250,000 in capital gains on a home sale is tax free. (For married couples filing a joint tax return, it’s $500,000.) Depending on your gain, and where you intend to land, you could pocket enough from the sale to support you while you wait until age 70 to claim the biggest possible inflation-adjusted Social Security benefit.

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