75-year-old Tim F. receives larger monthly Social Security checks because he waited until he was 70 to collect the benefits. He followed the general trend of securing bigger checks by delaying his retirement beyond 62 and even full retirement age, which is 67 for those born after 1960. However, Tim regrets not collecting Social Security earlier to spend that money fulfilling plans he had with his wife, Sarah, who died at 68.
In 2023, over 71 million people received benefits from Social Security programs. Social Security checks are an integral income source for millions of US households, making up 90% of total family income for 25% of retirees above 65. The maximum monthly check for retirees collecting payments at 62 is $2,710 this year but goes up to $4,873 for those retiring at 70. Meanwhile, retiring at full retirement age could fetch a maximum monthly income of $3,822. Tim's ability to delay retirement until age 70 translated to substantial annual income from Social Security. However, the senior recently shared in an interview with GOBankingRates that he is having second thoughts about the timing of his Social Security claim.
They Had Plans To Spend Their Benefits Together
Tim was under the impression he was on the right path by delaying his retirement benefits. "Everything you read says you should wait until 70 if you can," he explained. "I guess I thought, well, I can, so I should. I didn't stop to think about if that was actually the best plan for me." However, when Sarah passed away at 68, he started having second thoughts about the delay. Now, Tim wishes he had collected Social Security when his wife was alive. They wanted to go on trips, for instance. "Sarah and I had plans," Tim said. We were definitely thinking in the long term when we probably should've been more realistic about how much time we had left."
In terms of health, Tim underestimated how his health would change over time. While we don't experience much decline in health while transitioning from our 30s to 40s, a year in old age potentially means a lot of health changes.
Tim's Break-even Point Was Age 82
Financial experts often describe the break-even point as the age when the total benefits from waiting exceed the amount you would have got from claiming earlier. Tim's advisors calculated that he would reach the break-even point at age 82. "When you're 75, 82 feels pretty far off. I wish I'd thought more about enjoying the present rather than always planning for the future," he said. Tim also missed the opportunity to grow the Social Security benefits he saved in a high-interest savings account. "I'm not an investing powerhouse," Tim shared. "But I could've put the money in a high-interest savings account and made it work for me." Overall, the biggest impact of Tim's late Social Security claim was likely the stress of waiting and lost time.
While he thinks waiting till 70 to claim Social Security can work for many, he urges all future retirees to be realistic about their health in the next five years. Finding clarity in what you want in retirement, like spending time with family or travelling the world, also helps determine the right time to collect retirement checks. He also said that work can continue after retirement. Hence, one can try side hustles to boost income flow and lower dependence on government aid and benefits.
