Reaching retirement age can be a blessing and a curse for older adults anticipating their exit from the workforce. On one hand, you’ll have ample time to start projects you’ve been putting off, spend time with friends and family, or take a long vacation. On the other hand, you may be faced with financial insecurity once you stop receiving a steady paycheck.
That’s where Social Security comes in. This federally-run social insurance program has provided financial protection in the form of retirement, disability, and survivors’ benefits for over 80 years. Despite massive cuts and predictions that the program’s funds will run dry in 15 years, it remains an important financial tool for seniors. According to recent polls, 57 percent of retirees rely on Social Security as a major source of income.
If you’ve reached retirement age, but aren’t sure how to get the most out of your Social Security benefits, here are a few tips to help you get started:
Defer Your Benefits
When it comes to Social Security, the early bird doesn’t always get the worm. Even though you are eligible to begin accessing your benefits at age 62, it can be beneficial to wait until your late 60s or early 70s. If you can put off taking your benefits until you’re past the normal retirement age, which is currently set at 67, your monthly benefit check will increase over time.
Conversely, if you start withdrawing early, your benefits will be reduced for each year you take them ahead of schedule.
Plan Your Survivor Benefits
Married couples should make a plan to maximize their Social Security benefits should one spouse die. When one person passes away, the widow or widower can choose to receive their spouse’s benefits instead of their own, which can be advantageous if their deceased spouse received a bigger benefit check. Be sure to discuss any plans for the future with your spouse, so that if or when something happens, your loved ones are covered.
Streamline Your Spending
Regardless of your Social Security status, it’s helpful to rethink your spending and saving habits as you near retirement. Whether you decide to downsize your home, sell a vehicle, or move to a location with a lower cost of living, trimming your expenses will allow you to stretch your funds into the future. Healthcare is another major expense for seniors, so be sure to explore all of your options, including programs like Medicaid, to be sure you can stay healthy and save money for years to come.
Although it may not be possible for you to live entirely on Social Security benefits alone, understanding your options and adjusting your lifestyle can keep you in good financial standing well into your golden years.