Now might be the time to sign up for benefits.
When it comes to retirement planning, you may have to make careful decisions. These include whether to downsize, what kind of Medicare coverage to buy, and when to sign up for Social Security.
The amount you receive from Social Security is determined by your individual earnings history, but your filing age plays a big role in determining how much you’ll collect each month.
By waiting until full retirement age, you can be sure to receive your monthly benefit without any reduction. If you apply early, once you turn 62, your monthly benefit will be reduced. On the other hand, if you delay claiming Social Security past your full retirement age, your benefits will increase until age 70.
It’s clear that claiming Social Security at the right time is important, and many factors go into that decision. Here are three signs you may be ready to apply for benefits now.
1. Know what your retirement expenses will be.
The amount you receive each month is determined by your Social Security filing age, so it’s important to know what your monthly expenses are. But if you crunch the numbers and plan a retirement budget that takes into account what you want to do with the costs and time you need, you may be ready to claim Social Security.
It’s important to be realistic about your financial needs in retirement. In addition to the basics like housing, food, and medical care, you will need to figure out what to do with your time. And some of them cost money. But if your retirement budget reflects that, you may be in a good position to claim Social Security.
2. You evaluated your savings and calculated how much income you could earn.
Many people get so caught up in the idea of having a large individual retirement account (IRA) or 401(k) balance that they don’t stop to think about how much annual or monthly income their savings will generate. But if you’ve done these calculations, you’ll know how much income you’ll need from your benefits to meet your spending needs, so you may be ready to claim Social Security.
Let’s say you expect to earn $4,000 a month from your savings, based on your 401(k) plan balance. Let’s also say you want $6,000 in monthly retirement benefits to maintain your desired lifestyle.
If you’re eligible for $2,000 a month in Social Security at full retirement age, and you just reached that age, you can confidently apply for benefits now. Of course you It was done Delay applying for increased monthly checks. But if you feel like $2,000 a month in Social Security gives you the spending power you want, there’s no need to wait.
3. Understand how your filing age will affect your spouse financially
Claiming Social Security may be easier for single people than for married people. When you’re married, it’s important to assess not only your own financial needs, but also your spouse’s financial needs.
One thing to understand is that if your spouse is expected to outlive you, the amount you withdraw from Social Security each month will determine the survivor benefit he or she receives. But if you’ve already thought it through and understand how your filing age will affect your spouse’s finances, you may be ready to receive benefits yourself.
Claiming Social Security is something you should never rush into. But if the above signs apply to you, you can apply for benefits with confidence after crunching the numbers and considering how your decision will affect your spouse.
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