Many seniors end up retiring without a whole lot of money in savings. People in that boat commonly wind up very dependent on Social Security to cover many of their senior living expenses.
But what if you're in the opposite situation? Maybe you saved and invested so well throughout your career that you're now sitting on millions of dollars in savings. If that's the case, then the monthly benefit you collect from Social Security in retirement will probably end up being a fairly negligible amount of income for you.
But that doesn't mean you shouldn't try to land on the right filing age. The question is: What does that mean for you?
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Exploring your options
When it comes to filing for Social Security, you have choices. You can start collecting benefits at a reduced rate beginning at age 62. Meanwhile, you'll get your full monthly benefit based on your personal wage history once you reach full retirement age, or FRA. FRA is 67 if you were born in 1960 or any time after.
You can also delay your filing for a higher monthly benefit. For each year you postpone your Social Security filing past FRA, up until age 70, your monthly benefits grow 8%.
Now if you don't need money in retirement because you have enough of it from your savings, your decision could really go any way. You could decide to file for Social Security early and just get your benefits sooner so they're available for whatever purpose you think of. You could file on time because, well, that's an easy enough thing to do. Or, you could delay your filing and get more money from Social Security because, well, you can afford to wait.
So what's the right call? In this situation, there's really no wrong answer, so the key is to decide what you want to do with that money if it's not cash you actually need.
You may decide that you'd like to give your Social Security benefits to charity. In that case, you may opt to delay your filing as long as possible so you can give your charity of choice the most money.
You may also decide to invest your benefits and see what happens. If there's a venture you're excited about, you may decide to draw your benefits early, even if that means getting less money each month from Social Security.
Or, you may just decide to claim Social Security at FRA because it's a nice middle-ground compromise. And that's OK, too.
A good position to be in
When you need the money you're getting from Social Security to cover your essential bills, like housing and food, then you need to be very careful about when you sign up. You should still take the time to develop a solid Social Security filing strategy if you're in a position where you don't need the money.
But in that situation, at least the pressure is off. And that could make it much easier to choose a filing age that works for you.
