How to Boost Your Retirement Income by 33-75%, Without Risk!?!

Okay, boosting your retirement income by 33-75% is rather a grandiose claim to make. Can it really be done, in a safe way? The answer is yes, and the vehicle is Social Security.

When it comes time to claiming Social Security (SS) retirement benefits, statistics from the Social Security Administration (SSA) show that nearly 50% of men and women start their benefits at age 62. The upside to this decision is having that SS income now. When asked why they start their benefits at 62, some folks respond that they feel they better get their money while they can—because of fears that the SS trust fund will be going broke within the next few decades, give or take a few years.

The downside to starting benefits early is that the dollar amount is permanently reduced for all of your retirement years. Simply by waiting until “full retirement age” (typically about age 66 for Baby Boomers), your SS benefit will increase by 33-40%. If you can wait until age 70, your benefit will be about 75% higher than it would have been at age 62. That’s a huge difference for waiting 8 years!

Is there a downside to waiting? Yes, but probably not what you think. Contrary to feelings and discussions to the contrary, if the SS trust fund gets into “trouble” (not being able to pay full benefits when they’re due), we are still a few decades out from that situation. And if and when Congress finally faces reality to deal with the solvency issue, whatever they decide will likely affect everyone—whether you’ve already started benefits or not. So just because you start benefits early, getting what you can while you can, that doesn’t mean you’ll be spared from the axe (to a degree) down the road. We are talking about Congress here, and you know how “wise” their decisions can be in these tumultuous political times.

The real downside to delaying Social Security benefits is the risk of passing away unexpectedly before you start your benefits. If/when that happens, if you are single, your benefit is done. Oh there’s a small death benefit (a few hundred dollars), but that’s it. If you are married, then your spouse will likely be able to receive your benefit for the remainder of your life. So the real risk appears (to me at least) to be for singles who delay their benefits. But if you are single, in good health, and have a history of longevity in your family, delaying your benefits is probably a wise course of action. When to claim benefits for married couples can vary depending on factors like who earned more, who is older/younger, health status and so forth.

But in general, if you are single or married and want a higher amount of guaranteed, inflation-adjusted income for life in retirement, the solution is simple: delay claiming your Social Security benefits. It’s an easy, nearly risk-free way of increasing your retirement income by a third or even up to three-quarters of what it would have been.

What do you think? Does it make sense to delay SS benefits? Is it realistic when the economy is barely growing and there’s a looming fiscal crisis?

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About Mike Wilson

Michael L. Wilson, MBA, CFP®, CRC®, is the owner of Integrity Financial Planning. Prior to founding Integrity in 1998, he worked for two years as a faculty member at the College for Financial Planning in Denver, training other financial advisors. Mike has 10 years of experience in the mutual fund industry, having worked with Fidelity Investments and Invesco Mutual Funds. He holds an MBA in Finance from Baylor University. Learn more about his work at www.integrityplanner.com.
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