The decision to sign up for Social Security isn't one to be made lightly. That's because your filing age will dictate how much money you ultimately collect each month.
If you claim Social Security at your full retirement age, or FRA, you'll get the exact monthly benefit your earnings history entitles you to. Filing for benefits prior to FRA will result in a reduction, while delaying them beyond FRA will result in a boost -- and a potentially generous one at that.
In fact, if you hold off on claiming Social Security until age 70, which is when delayed retirement credits stop accruing, you'll boost your benefits by 24% to 32%, depending on your FRA. And that increase will remain in effect for the rest of your life. That could, in turn, make it easier to cover these costly retirement expenses.
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1. Housing
Many people enter retirement with their mortgages already paid off. In spite of that, a large number of seniors struggle to keep up with the cost of homeownership. That's because expenses like property taxes, insurance, and maintenance never go away.
Furthermore, as homes age, they tend to require more repairs. Those can be expensive -- especially if you're no longer able to easily do them yourself. A higher monthly Social Security benefit could make your housing costs less burdensome. And a more robust benefit could also spell the difference between being able to stay in your home and having to downsize.
2. Owning a car
If you live in an area without public transportation, you may need a car of your own in retirement. But you might have to pay a lot for it.
AAA estimates that the average cost to own a vehicle is $805.50 per month. If you're worried that a car will put a huge strain on your nest egg, then delaying your Social Security filing to receive a higher benefit could really help in that regard.
3. Healthcare
It's estimated that the average 65-year-old opposite-gendered couple today will spend a whopping $300,000 on healthcare throughout retirement, according to Fidelity. Reading between the lines, if you kick off retirement with known health issues or start having problems as you age, your bills could end up being even higher.
If you don't have money earmarked for medical costs in a health savings account, it really pays to consider delaying your Social Security claim. A higher monthly benefit could make your healthcare bills easier to handle.
An income boost could be a lifeline
Many seniors enter retirement expecting to spend a lot less on living costs than they did while they were working, only to realize that their bills are largely the same. If you have the option to delay your Social Security filing until the age of 70, it could pay to sit tight and wait to sign up. Having a guaranteed higher monthly benefit could spare you a world of financial stress as a senior -- and also make it possible to enjoy the freedom retirement has to offer.
