Waiting Until 65 To Claim Social Security? 6 Things To Do Until Then

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The Social Security Administration rewards patience. You can start claiming benefits as early as age 62, but you’ll receive less if you begin before your full retirement age. Full retirement age is currently between 66 and 67, inclusive, depending on your birth year.

If you’re waiting until 65 or later, here are six steps you can take in the meantime.

Review Your Earnings History

The Social Security Administration provides each U.S. citizen with a customized Social Security statement that breaks down their earnings and benefit eligibility. It includes specific data on:

• Your full retirement age
• Your monthly retirement benefit, depending on the age at which you start claiming
• Available disability benefits, if you became disabled today
• Your taxed earnings by year
• Total taxes paid toward Social Security and Medicare

You can view your statement at any time by creating a My Social Security account. If you’re 60 or older, you should receive a mailed statement three months before each birthday.

Calculate Your Total Savings

According to the federal government, American adults need 70% to 90% of their pre-retirement income to maintain their standard of living after they stop working. Social Security benefits replace only about 40% of most people’s income.

Before you start using Social Security as income, find out what you have available from other sources. If you have money in retirement plans, such as individual retirement accounts or 401(k) plans, review the withdrawal rules. Many have minimum ages for taking distributions. Conversely, if you’re under 59 1/2, there may be tax penalties if you need to withdraw early. 

Earn To Save

If you haven’t started collecting Social Security benefits, working is the most reliable way to pad your savings. It may even increase your monthly benefits once you start collecting, as Social Security bases your benefits on your 35 highest-earning years.

Consider saving as much of your income as possible, even if it means cutting back on nonessentials. Fewer years until retirement means less time for interest to build on itself, so every dollar counts.

Estimate Your Retirement Expenses

Retirement might mean losing out on employment income, but you also likely won’t need to cover certain expenses anymore. Retirees don’t have to commute, buy work clothes or hire a dog sitter. Some even find that it makes sense to move once work is no longer holding them in place.

Before you make any significant lifestyle decisions, calculate a retirement spending baseline. Review your current budget and adjust it for any expenses likely to change after you stop working. Include any expected decreases and increases in spending. For example, you might not have to buy lunches at work, but you might need to budget more for healthcare as you age.

This is the perfect time to consider where you can cut back, even before you retire. A different insurance or phone plan can make a difference without your lifestyle needing to take a hit. According to Consumer Reports, switching car insurance saves consumers a median of $461 annually.

If you make these changes before you retire, you can put that extra money into savings.

Talk With a Financial Advisor

The more you know about your retirement finances and options, the more prepared you’ll be. Once you’ve calculated your savings, retirement expenses and anticipated Social Security benefits, it’s time to start strategizing. 

An experienced financial advisor is your best advocate. Advisors can review the numbers you’ve calculated and provide personalized advice for moving forward, tailored to your goals and economic needs.

Most importantly, advisors have up-to-date knowledge of the investment and savings products available to help you maximize your earnings before retirement. They can help you determine whether you need to rebalance your savings and investment portfolio to reduce risk. After all, being closer to retirement means you have less time to recover from a loss.

Keep Learning and Stay Flexible

Whether you plan to collect Social Security next week, next month or in 10 years, it’s essential to keep an eye on your finances. Understand your total savings and how long they will last, given the amount you need to withdraw each month. Plan based on those numbers and adjust as necessary.

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