Social Security During Retirement: What Are Your Options?

When Should You Start Taking Your Social Security?

You are eligible to file for social security benefits when you turn 62, but if you do, your monthly check will be reduced significantly for the rest of your life. You may have little choice if you are out of work or in poor health and need the money to pay expenses. But if you have the wherewithal to work a few more years or have other sources of income, delaying checks until age 66, or your full benefit age, will increase your monthly amount by 33% or more.

How Can You Boost Your Social Security Payouts?

That’s not the only way working longer can boost your payouts. Your social security benefits are based on your highest 35 years of earnings. If you are a highly paid employee, working longer will displace some of your lower-earning years. You can see the Social Security Administration online tool that allows you to review your earnings record and get an estimate of your benefits. You should review this record annually because unreported or under-reported earnings reduce your monthly payments. To get your online statement, go to ssa.gov/mystatement.

If you work and get paid until age 70 and you start taking your full social security benefit at age 66, you can save four years of social security payment into your pretax or Roth retirement account. What a difference this makes!

Make Sure You’re Ready To Retire

Re-assess what you will spend in retirement. Most people underestimate how much they will spend when they retire. However, some financial planners and retirement calculators advise much more than you will need. While you may save on dry cleaning and commuting costs, you will still need to pay for groceries, utilities, and gas. If you refinanced to take cash out of your home, you may still have mortgage payments. And even after you’re eligible for Medicare, you will spend some money on health care costs. Fidelity Investments estimates that the average 65-year old couple will spend $260,000 on health care in retirement (“Health Care Costs,” 2016). Still convinced you can live on less?

Here is a good idea—try living on your projected retirement income for 6 months while you are still working. This exercise will force you to evaluate your spending and cut back if needed. That means you’ll be able to save more. And at this point in your life, saving is one of the few things you can control.