Entering your 60s without a Social Security strategy can mean leaving money on the table. It can also mean you don’t have a firm understanding of your finances, and what retirement lifestyle your savings can support.
While financial planning can get complex, every strategy starts with a single step. Read on for small moves you can take now that can help you make the most of Social Security.
Consider your retirement age
It’s common for people to contemplate retirement in their 60s, but it’s critical to consider several factors when deciding when to actually say goodbye to your job. For example, if you have enough money to retire before age 65, it’s important to remember that you typically can’t receive Medicare until age 65. Filing for Social Security, continuing to work or tapping into savings to prolong Social Security benefits are three possible scenarios, and each of them will impact your financial situation differently.
Taking out Social Security early will generally reduce how much you receive from the program overall. Continuing to work gives you more time to save and invest money while prolonging access to Social Security. You can also live off your nest egg and savings for a few years, ensuring that you can retire and wait to tap Social Security so you can receive larger benefits.
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The ‘small moves’ you can make
Every bold strategy starts with a single step, and knowing what small move you can take will move you closer to a smooth retirement. The small move may be to plan to work an extra year, picking up a side hustle or use savings as a bridge to delay Social Security.
Having clarity over your actions and knowing how they align with long-term financial goals is valuable for any person who is planning their retirement. Boosting your income and delaying access to Social Security benefits are two ways to increase your payouts. Working extra years will replace your lower-earning years — potentially increasing your benefit — since Social Security looks at your 35 highest-earning years when calculating your benefit.
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Example of how to give retirement finances a boost
If a 63-year-old wants to retire at 64 but hasn’t reviewed their financial planning, there are a few options to boost Social Security benefits.
The first option is to work a little longer. In this case, only working an extra year lets this hypothetical person retire at 65, which makes them eligible for Medicare. It also increases their Social Security benefits (though not as much as if they continued to wait to claim).
However, this same person can also opt for a part-time job and live off their savings for a few years to get closer to 70 before tapping into Social Security.
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