Along with investments, savings, a pension, an IRA or
a 401(k), Social Security can provide a key component of retirement income. That’s true for most Americans, so it’s important to understand Social Security benefits and make informed choices that affect lifetime benefits. Decisions made about when to start collecting Social Security can affect monthly cash flow, survivor’s benefits and lifetime income.
Social Security benefits:
- Guaranteed income for life. Once you start collecting Social Security, you’ll receive monthly payments for as long as you live.
- Steady purchasing power. If inflation rises, your payments will increase periodically to adjust to the rising costs of living.
- Flexible time to claim. Social Security offers a wide age span (62 to 70) to begin collecting. If you file a claim between age 62 and 66, your benefits will be less than the full amount you’re eligible for at 66. The longer you wait (up to 70), the higher your monthly benefit will be.
- 8% annual increase for delayed retirement credit (DRC). For each year you delay claiming Social Security after full retirement age (currently 66), your benefit increases by 8%. This 8% increase applies for each year you delay up to age 70.
Because age makes so much difference to the amount in benefits paid, investors and advisors must understand the nuances that determine Social Security’s “magical” age, why patience may pay off and the perks for married couples who plan ahead.
Call your financial advisor today to find out how Social Security can best augment your financial plan.