One Simple Chart Explains How To Double Your Social Security Payments
Beginning back on January 1st, 2011 every single day more than 10,000 Baby Boomers will reach the age of 65. That is going to keep happening every single day for the next 19 years.
If that is you, this post is going to help you get the most out of your Social Security benefits.
If you didn’t know it already , the longer you wait to receive your benefits, the bigger they will be.
How much bigger you ask, our friends at Motley Fool marked up a chart from the Social Security Administration.
The chart illustrates what happens when you apply for benefits at three different age points.
1) The first is at age 62, the earliest point of eligibility.
2) The age of 66, the age of full retirement, and the point when you are able to receive the entire ‘primary insurance amount’.
3) The third age is 70, which includes ‘delayed retirement credits’. These credits will largely increase your payments.
What is so incredible is the difference between the points. If you were born between the years of 1943 and 1954, you have a 33% reward for waiting until the age of 66. And if you wait until the age of 70 to start drawing SS benefits, you will receive 76% or almost 2xs the original amount.
Why is this happening?
First off, retirees are punished for taking their benefits early. The SSA essentially docks your primary insurance amount by 5/9ths of 1% every month you take those benefits early up to 36 months and then 5/12ths of 1% for every month after that.
In the second case, retirees are ‘gifted’ for waiting to receive their benefits until after their retirement age. If you are someone willing to choose this route, your monthly SS check increases by 8% for every full year after you defer, up to the ripe age of 70. So by simply waiting, your monthly SS check increases by not-to-shabby 32%.
Is this worth the wait?
Like anything, it really depends on your specific situation.
If you can afford to wait and you are likely to live past the age of 77, it would be in your best interest to do so. If you plan on living to 82, it would be worth waiting until you are 70, at the point your benefits are maximized. Now, by contrast, if you can’t afford to wait, taking benefits early is your option.
This is a topic we tend to shy away from thinking about too regularly, however, it is incredibly important to you and your loved ones to consider all of your options. If you’ve paid into the system, there is nothing wrong with maximizing the amount you take out in return.
(h/t: Motley Fool | Business Insider)