By Linda Raineault
We keep hearing about delaying Social Security benefits. But we’ve waited years to tap into this pot!
Well, if you can be patient, you may discover that patience is more than just a virtue.
The good news is that medical science is extending our life expectancy in remarkable ways. Today women who reach the age of 65 can expect to live to age 86 and men to age 84, according to the Social Security Administration.
About a quarter of this group will live past 90. That means that for a married couple there is at least a 50% chance one of you will live past 90. We should all be excited about planning for what we are going to do with all those extra years!
Unfortunately the bad news is that many of us are not thinking that far into the future. It’s our nature to only envision the next three to five years and not beyond.
Such short sightedness is causing many of us to make poor decisions when it comes to our financial futures. What good is living to age 90 if we don’t have sufficient funds to sustain our basic lifestyles?
Still time to get more
Even if you haven’t put away a large retirement nest egg, you can still maximize your Social Security benefits by waiting until age 66 or beyond before signing up. Because Social Security pays inflation-adjusted benefits for life, it can be considered a kind of longevity insurance. Essentially insurance against one spouse living too long.
The one key way to maximize Social Security income in old age is to delay the start of benefits to age 70. That’s how you “buy” more longevity protection through Social Security.
What is the cost to you of this insurance?
Should both you and your spouse die before the average break even age of 7,8 then you have foregone the monthly benefit you would have received if you had taken your benefit at age 62 and it has cost you the total amount of the foregone benefits.
But if even one of you lives’ past the average break-even age of 78 you are getting this longevity insurance for free. Should one of you live past the age of 90, and those chances are good, the value of that free insurance is huge!
Maybe the wait will be worth it.
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