Should you wait to collect social security?
Deciding when to start collecting Social Security benefits is a crucial financial decision that can significantly impact your retirement income. Whether you should wait to collect Social Security depends on various factors, including your financial situation, health, and life expectancy. In this article, we will explore the advantages and disadvantages of waiting to collect Social Security and help you make an informed decision.
Advantages of Waiting to Collect Social Security
1. Higher Monthly Benefits: If you delay collecting Social Security until age 70, your monthly benefits will increase by approximately 8% per year. This means that for every year you wait beyond your full retirement age (FRA), your benefits will grow by about 8%.
2. Longer Lifespan: If you expect to live a long life, waiting to collect Social Security can be beneficial. By delaying benefits, you will receive a higher monthly income for a longer period, which can help you maintain your lifestyle during your retirement years.
3. Cost of Living Adjustments (COLA): Social Security benefits are adjusted for inflation each year. By waiting to collect benefits, you will receive the full COLA, which can help keep up with rising costs of living.
4. Spousal Benefits: If you are married, waiting to collect Social Security can also benefit your spouse. When you delay collecting your benefits, your spouse may be eligible for a higher spousal benefit based on your earnings record.
Disadvantages of Waiting to Collect Social Security
1. Immediate Need for Income: If you require additional income to cover your expenses during retirement, waiting to collect Social Security may not be the best option. By delaying benefits, you may face financial strain in the short term.
2. Health Concerns: If you have health issues that may limit your life expectancy, waiting to collect Social Security may not be advantageous. In such cases, it may be more beneficial to start collecting benefits early to ensure you have enough income to cover your expenses.
3. Market Volatility: If you have invested your retirement savings in the stock market, waiting to collect Social Security can provide a buffer against market volatility. However, if the market performs well, you may miss out on potential investment gains.
Conclusion
Ultimately, the decision to wait to collect Social Security depends on your individual circumstances. Consider your financial situation, health, and life expectancy when making this important decision. It may be helpful to consult with a financial advisor to discuss your options and determine the best course of action for your retirement. Remember, the right choice for one person may not be the right choice for another, so it’s essential to weigh the advantages and disadvantages carefully.
