Wait as long as you can to collect
While most people can start receiving their monthly Social Security benefit at age 62, it’s often smarter to wait, financial planner Kevin Coffey advises. Why? “If you wait until you’re 70, your monthly Social Security payment grows at 8 percent a year,” he says. “The longer you can delay it, the better, if you’re in good health and don’t need the money.” To cover everyday expenses, tap other retirement funds such as your 401(k), pension fund, annuities, or IRA accounts, or keep working and contributing to savings as long as you can. Here’s an easy strategy to build a $40,000 nest egg.
Use free Social Security tools to plan
First, make sure you have a good advice—use this checklist when picking a financial planner. Then give the Social Security Administration easy-to-use retirement benefit calculator a shot: It uses your current annual income and past earnings to estimate what your monthly check will be. Everyone should also set up an online “My Social Security” account to access your annual statement, or request one by mail to verify that each year’s reported earnings are correct. Social Security is not a one-size-fits-all program, Coffey says: “The timing of your benefits, and which spouse files first, can make a difference of thousands of dollars.” Financial planners and investment firms may offer more detailed calculators that take all your retirement assets into account, and list all the possible options, to help you decide.