How Living Before 65 Can Improve Your Social Security Checks
Entering age 60 without a Social Security plan can mean leaving money on the table. It can also mean that you don’t have a solid understanding of your finances, and what kind of retirement lifestyle you can afford.
Although financial planning can be difficult, every strategy starts with one step. Read on for small steps you can take now to help you make the most of Social Security.
Consider your retirement age
It’s common for people to think about retirement in their 60s, but it’s important to consider a few factors when deciding when to actually say goodbye to your career. For example, if you have enough money to retire before age 65, it’s important to remember that you can’t get Medicare until you’re 65. Filing for Social Security, continuing to work or earning savings to extend Social Security benefits are three possible scenarios, and each of them will affect your financial situation in a different way.
Taking Social Security early will reduce how much you get from the program overall. Continuing to work gives you more time to save and invest while expanding access to Social Security. You can also live off your nest egg and savings for a few years, making sure you can retire and wait to tap Social Security for big benefits.
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The ‘small moves’ you can make
Every bold strategy starts with one step, and knowing what small steps you can take will bring you closer to a smooth retirement. A small move might be planning to work an extra year, finding a side hustle or using savings as a bridge to delay Social Security.
Being clear about your actions and knowing how they fit into your long-term financial goals is important for anyone planning for their retirement. Improving your income and delaying access to Social Security benefits are two ways to increase your payments. Working more years will replace your least-earning years — which could increase your benefits — since Social Security considers your 35 highest-earning years when calculating your benefits.
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An example of how to improve retirement savings
If a 63-year-old wants to retire at age 64 but hasn’t revised their financial planning, there are several options for improving Social Security benefits.
The first option is to work longer. In this case, working just one more year allows this person to retire at 65, making them eligible for Medicare. It also increases their Social Security benefits (though not as long as they continue to wait to apply).
However, this same person can also choose a part-time job and live off their savings for a few years to get closer to 70 before entering Social Security.
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