Suze Orman, a popular finance personality, emphasizes the importance of deciding when to take Social Security benefits in retirement. While retirees can begin receiving benefits as early as 62, Orman advises waiting in order to maximize monthly checks for the long term. She encourages individuals to consider how their financial decisions today will impact their future older selves, and urges them to think about the implications of claiming benefits early versus delaying.
A study by MassMutual found that many Americans aged 55 to 65 view Social Security as their primary source of retirement income, ahead of other financial vehicles like 401(k) plans and investments. Orman explains that delaying the claiming of benefits can lead to larger payouts in the future. For example, individuals born in 1960 or later, whose full retirement age is 67, would see their benefits reduced by approximately 30% if claimed at 62. This reduction can significantly impact the amount of monthly benefits received, emphasizing the importance of strategic planning.
While there are factors that may prompt individuals to take benefits early, such as health concerns or loss aversion, Orman emphasizes the need to overcome psychological and emotional hurdles to make the best financial decisions. She encourages prospective retirees to start planning early and make informed decisions about when to claim Social Security benefits. Delaying the claiming of benefits can have a significant impact on retirement income and financial stability in the long run, highlighting the need for careful consideration and planning.
In order to offset the income gap created by waiting until full retirement age to claim benefits, retirees may need to explore alternative income sources such as extended employment or part-time work. It is also important to plan for a substantial nest egg in retirement savings, through strategies such as investing in tax-advantaged accounts, contributing a percentage of income to a 401(k), and investing in real estate properties. Working with a financial adviser can help individuals assess their financial situation and develop a roadmap to achieving their retirement goals while managing savings effectively.
Overall, Orman emphasizes the importance of strategic planning and decision-making when it comes to claiming Social Security benefits in retirement. By delaying the claiming of benefits, retirees can maximize their monthly checks and ensure financial stability in their later years. It is crucial to start planning early, explore alternative income sources, and invest in retirement savings to achieve a dream retirement and secure financial future. Consulting with a financial adviser can provide valuable insights and guidance in navigating the complexities of retirement planning and maximizing financial resources for the long term.
