What to Do in Your 60s to Protect Social Security Income
Financial planning in your 60s brings a new element into the mix: Social Security. With the option to start claiming benefits at age 62, it’s crucial to take steps to protect and potentially enhance your lifetime income. Here are five essential steps for individuals in their 60s to maximize their Social Security benefits:
1. Review your benefits estimate
It’s important to know how much you can expect to receive from Social Security. The Social Security Administration’s website provides tools to calculate an estimate of your benefits. This information can help you plan for your retirement, including deciding whether to delay your claim to receive higher benefits over your lifetime.
2. Audit your earnings record
Each year, your employer reports your earnings to the SSA, which determines your Social Security benefits. Review your earnings record on the SSA website and ensure that all your earnings are accurately recorded. If any discrepancies are found, provide proof of your earnings to the SSA to make corrections. A revised earnings history can impact the amount you receive from Social Security and help you make informed decisions about your retirement timeline.
3. Decide on your ideal claiming window
Your claiming window depends on your financial situation, but remember that claiming early results in smaller benefits compared to waiting. Delaying your claim can increase your benefits, as Social Security payments grow the longer you defer. Working longer can also boost your lifetime earnings and give your retirement savings more time to grow.
4. Address debt and spending habits
Some individuals may choose to claim Social Security early to cover living expenses. However, reducing unnecessary expenses and managing debt can potentially delay the need to claim benefits. Review your expenses, eliminate unnecessary subscriptions, and cut down on non-essential spending to improve your financial situation.
5. Update your tax and investment withdrawal strategy
Consider living off your portfolio for a few years before claiming Social Security. This approach allows your benefits to grow while potentially lowering your tax liability and reducing required minimum distributions (RMDs) once you reach age 73. RMDs are mandatory withdrawals from retirement accounts, and delaying Social Security can help minimize their impact on your finances.
By following these steps, individuals in their 60s can optimize their Social Security benefits and secure their financial future in retirement. Make informed decisions about your benefits, earnings record, claiming strategy, expenses, and investment approach to maximize your lifetime income.
