Delay Benefits

Delay Benefits. Reverse Mortgage Alabama. I found a great interpretation of what it means to delay taking social security benefits, and how it could help or hurt.

Retiring Wise Blog. Finances. Sean Bryant is a freelance writer and owner of www.onesmartdollar.com.

As you approach retirement age, there are a lot of aspects in your financial life that you need to make sure to take care of. You have to determine when you’re eligible for Medicare, and what sort of add-ons and supplements you may need. You have to make sure that your savings and investments are enough to cover your living expenses. And you have to determine if your social security benefits are going to be enough, or if you should wait to maximize your monthly benefits.

There is no one answer for everyone; it all depends on your financial situation and your retirement goals.

When is Your Full Retirement? While you can begin withdrawing social security at age 62, the social security administration (SSA) has something call a “full retirement age.” According to the administration, “Full retirement age is the age at which a person may first become entitled to full or unreduced retirement benefits.”

Your full retirement age depends on what year you were born. For example, those born before 1954, the full retirement age is at 66. After that date, the age increases by two months: born in 1955, full retirement is 66 and 2 months; born in 1956, the age is 66 and 4 months; and it keeps increasing two months until 1960 or later when the full retirement age becomes 67. The SSA has a great visual table on their site for reference.

You can take your benefit up to four years early, or up to three years later. Taking it early – at any age before 67 – will result in a permanently reduced benefit, while taking it later will give you a permanently higher benefit (up to age 70, after that there is no additional benefit to waiting).

So the question remains: should you take it early, at full retirement, or wait as long as possible?

Too Early is a Severe Cut in Benefits. If you take your benefit four years early, your benefit will be reduced 25%. This means if you were expecting to get $2,000 per month at full retirement, you will end up with $1,500 per month. That’s a pretty big cut in your benefit, and it can add up over the years.

Each month that you wait, your benefit amount will go up.Waiting May Be Better. Using our example, if you waited until age 67, you would get $2,000 per month. But if you wait another three years (until age 70), you could see that benefit increase to $2,640 per month.

Even with fewer years to collect (depending on life expectancy), you may end up collecting more because you waited to take your benefit.

Waiting to draw on your social security has its benefits. However, some of us don’t all have the ability to work in retirement as we wait to collect, and some may not want to drain their savings to cover those extra years before they begin collecting social security.

There are still some options.Using a Reverse Mortgage to Live Off-You have probably heard of a reverse mortgage, but you may be unfamiliar with how they work. Here’s a simplified explanation:

If you are a homeowner who is 62 or older, you may be able to borrow money based on the equity in their home, your age, and current interest rates. If you have a current mortgage on your home, the reverse mortgage will pay that loan off. The rest of the proceeds are then used however you want. You can make a monthly payment if you want, but it is not required. However, it is important to remember, you will still have to pay your property taxes, homeowners insurance, and home maintenance costs.

There are eligibility requirements, guidelines, and other details, of course, that you will want to go over before applying for a reverse mortgage.

To Delay or Not to Delay-Delaying your Social Security benefits can be a better option if you wish to have more money available to you each month. It can also be a better option if you have income outside of your benefits (this can result in your Social Security being taxed).

For those who don’t have the liquid assets to delay their Social Security benefits as long as possible, they still have options to help pay the bills as they wait for their benefit to grow as large as possible.

As with any financial decision, the best action to take is to first talk to your financial advisor. They will be able to assess your current financial situation and help you determine the best plan of action. This article is for informational purposes only.