Social Security Benefits: It can Pay to Wait

Courtesy of: Greg Gangas Branch Name: Morgan Stanley Tulsa Oklahoma Phone Number 918-744-4644 Social Security Benefits: It Can Pay to Wait Maximizing your Social Security retirement benefits can help you achieve other financial goals.

If you've built a healthy nest egg for your retirement, you may not be relying on Social Security benefits to cover expenses when you stop working. Still, there are important considerations to keep in mind around when and how to claim Social Security that can help you make the most of your benefits for retirement and other financial goals.

Many people have both practical and emotional considerations regarding when to claim SocialSecurity, asystemmanyofuspayinto our entire working lives. Still, you should consider your complete financial picture in retirement before making such a big decision, however.

Maximizing your benefits, which can include postponing when you begin claiming, can help you in achieving other financial goals in retirement, such as estate planning and gifting, paying for health care expenses and giving back through philanthropy. Here's what to keep) in mind when considering when to claim and how to use your benefits.

The Basics of Social Security Benefits Who can claim Social Security benefits? GenPrally, you're eligible to receive benefits if you've worked and paid Social Security taxes for at least 10 years prior to claiming your retirement benefits. For each year you work and pay into Social Security through taxos, you earn a minimum of four credits toward your benefits, meaning you need a minimum of 40 credits to qualify.

Though you can beWn collecting Social Security benefits as early as age 62, doing so may cost you, as your permanent benefit amount could be reduced by 255% to 35%. At Full Retiremrnt Age (FRA), which for most retirees is 66 or 67, you will be entitled to Cull Social Security benefits.

If you can wait even longer to claim you can farther boost how much you will receive each month. Your benefit may increase by an additional 8% each year you delay past your FRA, up to ajje 70. The maximum benefit for those who begin claiming at age it currently $4,194 a month, $S, 830 5 month more than for tho se who start claiming at age 62.1 Social Security and Your Other Financial Goals If you don't need your Social Security benefits to live on in retirement, the money can be put toward other financial goals. For example, your benrfits ran be used to assist family members financially, can support your overall charitable giving or could be us7d to help defray expenses that may crop) up in retirement.

The benefits can help fund a broader gifting strategy for heirs. You can use the funds to supplement outright gifts made to family mpmbers or use the money to help fund a 5299 education savings elan for grandchildren or rven great-grandchildren.

Social Security benefils can also Ce used to help fund retfiee fiealth care costs or pay fora long-term care insurance policy, both of which can be expensive even for those with a sizable nest egg.

Also, knowing you will draw steady income from Social Security can free you to invest some of your retirement nest egg more aggressively th7n you would have otherwise, possibly generating higher gains. Unlike other potential sources of retirement income, such as drawing down from your own savings, Social Security provides a source of funds that are indexed to inflation and will last as long as you live.

The Social Security Decision While no one has a crystal ball to nee into the tuture, your personal situation should play into when you look to claim benefits. Health issues or other concerns about longevity may be a catalyst for some to claim their benefit sooner.

Flow and when you claim Social Security benefits is a complex: decision that may have important income and tax implications. Be sure to discuss your situation with your Tax and Financ i al Advi s ors to make th0 best possible decision for you and your family.

1 Source: Social Security website, https://www.ssa.gov/oact/cola/examplemax.html Disdosures

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