4 Financial Moves To Make at 62 If You’re Delaying Collecting Social Security
Written by
Ashley Donohoe
Edited by
Daria Uhlig
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Although you could begin collecting Social Security at age 62, delaying your benefits to your full retirement age or later could provide you with significantly higher monthly payments for the rest of your life. But this decision does require some careful planning so you can determine how to handle your living expenses and other costs without this income stream.
Here are four financial moves you should make if you’re 62 and delaying Social Security benefits.
1. See a Financial Advisor
You’ll likely rely heavily on your nest egg until you begin receiving Social Security payments. But if you’re not careful, you could withdraw the funds too quickly or end up with a big income tax bill.
It’s a good idea to sit down with a financial advisor who will consider the types of accounts and investments you have and help you come up with the right withdrawal strategy. Ideally, you’ll make withdrawals that minimize taxes and don’t risk outliving your retirement savings. Your advisor can also help you optimize your portfolio to protect your wealth.Â
2. Reduce Your Expenses
When delaying your Social Security benefits, you should consider cutting your expenses so you avoid excessively withdrawing from your retirement savings or running up debt. Downsizing your home or getting rid of extra vehicles could lead to significant savings each month. Some other ways to lower your costs during retirement include:
- Shopping wisely for groceries
- Canceling costly subscriptions
- Making your home more energy-efficient
- Downgrading internet and phone plans
- Taking on free or low-cost hobbies
- Taking care of your health
- Revisiting your insurance plans
- Timing your vacations during slower times
- Paying off high-interest debts
- Using senior discounts
3. Consider Staying in the Workforce
Whether to leave the workforce at retirement age or continue to work is a decision that even many Social Security recipients make. Earnings from a full-time job, or even part-time side gig, can cover expenses and go toward continuing to save for retirement.
Since you won’t be collecting benefits yet, you won’t have to worry about the Social Security earnings limits that can lead to monthly benefit reductions. Plus, there are benefits to staying active, being social and doing meaningful work in your senior years.
4. Have Emergency Cash Sources
While you should have a plan to cover your living expenses with your available retirement income sources and any job you have, an emergency could always arise during retirement. Not having Social Security as an income stream can put your long-term finances at risk if a big expense tempts you to drain your retirement savings or charge your credit card.
Make sure you’ve saved three to six months of typical expenses in a non-retirement account for emergencies. You can also consider other possible cash sources, such as your life insurance’s cash value.
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