Social Security: This Simple Chart Shows How to Almost Double Your Benefits

If you're thinking about retirement and Social Security, this is one chart you need to see.

May 17, 2014 at 7:03AM


If you're approaching retirement age and want to get the most out of Social Security, there's one thing you need to know: The longer you wait to receive benefits, the bigger they will be.

How much bigger? To illustrate this, I drew up the following chart, which compares the difference between applying for benefits at three different ages.

  • The first is at age 62, when you're first eligible to apply.
  • The second is at 66, when you reach "full retirement age" and are thus eligible to receive your entire "primary insurance amount."
  • And the third is at 70, which includes "delayed retirement credits" and thereby boosts your monthly check.


The difference between these points is dramatic. Assuming you were born between 1943 and 1954, your reward for waiting until age 66, as opposed to starting benefits at 62, is a 33% increase. And if you wait until turning 70, the payment goes up by 76%, or nearly double the original amount.

The reason is twofold. In the first case, retirees are effectively punished for receiving benefits early. The Social Security Administration does so by docking your primary insurance amount (what you're entitled to at 66) by five-ninths of 1% for every month you take benefits early up to 36 months and then five-twelfths of 1% for every month thereafter (currently up to 12 months -- though this begins to increase for people born after 1954).

Alternatively, in the second case, retirees are rewarded for waiting to receive benefits until after their full retirement age. If you choose this route, your monthly check increases by 8% for each full year that you defer, up to age 70. By waiting until then, in other words, your monthly Social Security check would increase by an impressive 32%.

So, is it worth it to wait? It depends. If you can financially afford to wait and are likely to live past age 77, then it would be in your interest to do so. Moreover, if you plan on living past 82, then it'd also be worth it to wait until turning 70, at which point your benefits are maximized. By contrast, if you can't afford to wait or aren't as optimistic about your longevity, then taking benefits early will almost certainly be a better option in your particular case.

This is a morbid and unfortunate subject, to be sure. And it's one that few people want to consider. But it's nevertheless critical that you do so. Remember, you've paid into the system for dozens of years. As a result, there's absolutely nothing wrong with wanting to maximize what you take out of it in return.

How to get even more income during retirement
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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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