Unlocking a Larger Retirement Income Stream: The Power of Delaying Social Security
When it comes to retirement, many individuals eagerly await the day they can start collecting their Social Security benefits. However, a strategic approach to claiming these benefits can significantly impact the size of the checks. According to a recent report, over 70% of Social Security beneficiaries claim their benefits before reaching age 64, with 29% of new retirees claiming before age 62. But delaying benefits beyond full retirement age can lead to substantially larger payments.
One effective strategy for maximizing Social Security income is the “Social Security bridge.” This approach involves using 401(k) assets or other savings to support oneself during the gap between retirement and age 70, when maximum benefits can be claimed. By doing so, retirees can increase their lifetime benefits by up to 76% compared to claiming at age 62.
Researchers at the Center for Retirement Research at Boston College have explored the potential of this strategy, finding that many workers would utilize it if given the opportunity. Unlike traditional annuities, the Social Security bridge offers an inflation-adjusted income stream without the need to purchase an annuity from an insurance company.
While the bridge strategy may not be suitable for everyone, particularly those with shorter life expectancies, it can provide a larger stream of guaranteed income in retirement. Financial advisors can help individuals determine if this approach is right for them and develop a personalized plan for creating stable and reliable income in retirement.
In fact, a recent survey found that nearly a third of workers between 50 and 65 would use the Social Security bridge strategy if offered by their employer. The more information respondents received about the concept, the more interested they became. This highlights the potential for the bridge strategy to become a valuable tool in retirement planning.
By understanding the benefits of delaying Social Security and utilizing the bridge strategy, individuals can unlock a larger retirement income stream and enjoy a more secure financial future.
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