L.A. Times: Use ‘Other Resources’ to Delay Taking Social Security

The increase in Social Security benefits that come with delaying the acceptance of program payments until the age of 70 can make a big enough difference in the lives of retirees that it should be a serious consideration for every senior. This is according to finance columnist Liz Weston, in a new column published at the Los Angeles Times.

“The 8% delayed retirement credits apply whether you’re working or not,” Weston writes to a reader asking about the delaying of benefits. “Those credits will help you maximize the benefit you receive for the rest of your life and potentially the rest of your spouse’s life, if you are the higher earner in a marriage. This effect is so powerful that many financial planners recommend their clients tap other resources, such as retirement funds, if it allows them to put off claiming Social Security.”

Sometimes, those “other resources” can include home equity, as previously detailed by Weston in a prior article. Additionally, if a senior continued to work into older age and took Social Security benefits while still employed, that can also be a tactic worthy of consideration for some seniors who fit into that situation.

“If you did continue to work, your benefit might be increased somewhat by the additional earnings,” she writes. “This typically happens if you had a low-earning year included in the 35 highest-earning years that Social Security uses to calculate your benefit. If you had earned more in 2020 than in one of those previous years, then your 2020 earnings would replace that past year’s earnings in the formula and boost your benefit.”

In the end, though, it is the delay of taking the benefits that may prove to have the biggest difference in the lives of retirees, she writes.

“The 8% delayed retirement credit probably will have a much bigger effect on what you ultimately get, though, so don’t fret about any missed opportunities,” Weston writes. “Just try to delay your application as long as you can.”

Weston has specifically cited reverse mortgages in the past as an option for seniors who are looking for additional options to create cash flow among the senior demographic.

“If you can’t cover expenses with your income, you may have other alternatives,” she wrote last fall. “If you own a home, have substantial equity (at least 50%) and are at least 62, a reverse mortgage can help you turn your home’s value into a guaranteed monthly check. Or you may decide to sell your home and find somewhere cheaper to live.”

Read the new column on Social Security benefits at the L.A. Times.

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