There’s a reason so many older Americans rush to claim Social Security at 62. It’s hard to avoid the temptation to take benefits the moment you’re able to. However, if you’re willing to be patient, there could be a huge payoff.
Social Security will reward you financially for each month you wait to take benefits upon becoming eligible. If you’re willing to delay your claim until age 70, the upside could be huge.
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Delaying Social Security until age 70 means you’ll have to support yourself financially in the interim. One easy way to do that is to continue working full-time until your 70th birthday, but that may not be something you want. If that’s the case, you have a couple of options to explore.
1. Tap your savings — if you have enough
Let’s say you’re interested in claiming Social Security at 70 for the larger monthly benefits but aren’t interested in plugging away at a job all of those extra years. In that case, you may be able to tap your savings to support yourself through age 70. But whether this is a viable solution depends on how much money you have socked away.
If you’re sitting on a $400,000 IRA balance, that’s not a huge sum of money for what could be a 30-year retirement. And it may not be wise to take large withdrawals for a few years while you’re waiting on Social Security, as that could mean depleting your nest egg too rapidly.
On the other hand, if you have a $2 million IRA, you have a lot more leeway. You may be able to withdraw enough money to cover all of your expenses for a few years and then scale back on withdrawals once your larger Social Security checks start rolling in every month.
2. Pick up part-time work you enjoy
You may not have enough savings to be able to raid your IRA or 401(k) heavily while you wait on Social Security. However, if you’re willing to work part-time at a job you enjoy, you can set yourself up to delay Social Security without putting yourself at risk of running out of money.
The gig economy is still going strong these days, which gives you a prime opportunity to earn money doing something you like. And if you don’t manage to find your way into the gig economy, you could seek out part-time work in a more traditional role.
Another option may be to transition into part-time work at your current job. If you’ve been there for a long time and have a great relationship with your employer, the company may be willing to support a more phased transition into retirement. That could leave you with a lighter load and a steady paycheck at the same time.
Claiming Social Security at 70 could put a lot more money in your pocket each month on a lifelong basis. But you’ll need a way to cover your expenses while you’re waiting to sign up. The good news is that full-time work isn’t your only option, so it pays to explore the choices above before resigning yourself to that.
