NEW YORK (MainStreet) — Maxing out on your Social Security benefits is a pretty big deal, considering that the No. 1 fear among retirees is not having enough cash to live on all the way through retirement, according to a study by Prudential Financial
That study says Social Security accounts for about 40% of all retirement benefits, yet most retirees “never focus on how to help maximize the very benefits that may help sustain them throughout retirement.”
For a number of reasons, “it’s best to delay” getting benefits, says Dan White, founder of the Philadelphia-based financial advisory firm Daniel White & Associates.
Here’s why, and how:
“For every year you wait [before turning 70], your income can go up,” White says. “Most people start drawing Social Security earlier than what is ideal for them.”
Ted Sarenski, a financial planner and member of the American Institute of Certified Public Accountants’s National CPA Financial Literacy Commission, says Americans approaching retirement age should “run the numbers” and find out what they’re gaining and losing with their Social Security strategy.
White agrees “It’s best to wait it out and bridge that five-year gap” to age 67, and there are several ways to to delay drawing benefits until then.
“A 401(k), investments and other retirement accounts may be better used if they bridge the gap between retirement and a later start to social security,” he says, warning that married couples should take special precautions. “Couple must plan for retirement together — even if they will time their individual retirements differently — in order to maximize benefits.”