We have all been programmed to believe that when we reach age 65 we should head down to the social security office and declare ourselves eligible for benefits like Medicare, for example, as our ability to qualify for valuable programs like this one come to light.
The starting dates for some future retirees have a deferral of retirement commencement ages so keep in mind that certain milestones mentioned here need to be monitored for your personal situation.
Many of us make the most common error in securing our social security benefits by starting them as soon as we become eligible to do so. Unless you are in poor health, you can earn a substantial premium on your social security checks by waiting until age 70 to start.
We are all too familiar with low-interest rates these days and it’s true that they make waiting it out even more important as your monthly check from social security will be substantially higher if you can do so. This is because if you had a savings account with an annual social security benefit of $20,000, you will earn an additional $1,600 of 8% each year.
At Czarnowski & Beer, we suggest that you bypass the desire to stop holding onto your IRA or 401(K) and start tapping in at age 65, although that’s the opposite of what most should do because waiting until 70 to take benefits can pay off in more ways than one.
Many upcoming retirees either think they just can’t stand working past age 65 (or 66 or 67). Assuming you have worked steadily for many years, maybe a minimal amount of “consulting” will be necessary to keep you employed. Think about it, your company probably needs you to consult. It makes no sense to let all that experience leave at once. The other fear many retirees have is that they may not live long enough to recapture the lower monthly payments from 65 to 70. We hate to be brutally honest, but you are dead when you are dead. In the end, there is no judgment of whether you did it right or wrong and we shouldn’t be afraid of outliving our retirement money more than we are of leaving it to our loved ones. That extra 8% goes a long way to support us until the inevitable.
A lot of people also look at putting off taking social security by funding their living expenses with withdrawals from their IRAs or 401(k)s with disdain, because those accounts are 100% taxable upon receipt and they hate “giving money to Uncle Sam,” But keep in mind that for certain taxpayers, social security is 85% taxable.
Retirees can be assured that the Czarnowski & Beer team can outline specific steps you should take to maximize their retirement benefits. Contact us at info@czarbeer.com to share your comments on this article and more.