Pittsburgh, PA – Many older Americans rely on Social Security as their main source of income in retirement. However, there are certain moves that retirees should avoid when it comes to claiming their benefits.
One common mistake is claiming Social Security benefits early. While individuals are able to start receiving benefits as early as age 62, doing so will result in a permanent reduction in the monthly benefit. This reduction can have a significant impact on a retiree’s financial security, especially if they do not have substantial savings in other retirement accounts.
On the other hand, delaying the filing for Social Security can result in an 8% boost in benefits for each year beyond full retirement age, up until age 70. This may be a viable option for individuals who need additional income to cover expenses, but it’s important to consider the potential loss of lifetime income if one were to pass away at a younger age.
It’s also unwise to rely solely on Social Security for all retirement income. While it may replace about 40% of pre-retirement wages, most retirees need about 70% to 80% of their previous income to live comfortably. It’s crucial to have additional sources of income, whether it be from retirement accounts like 401(k) or IRA, or from other investments.
Ultimately, the decisions made regarding Social Security can have a lasting impact on a retiree’s financial well-being. Being aware of the potential pitfalls and planning accordingly can help retirees avoid financial struggles in their later years.