Simple Ways to Delay Taking Social Security

In my last article, I talked about why delaying acceptance of Social Security benefits is better. Although delaying taking Social Security is better, it is easier said than done. You need to plan your finances in such a way that you still have enough money to continue living comfortably without using Social Security money. If you are able to successfully push off this period, it will significantly boost your retirement income. So in this article, we will discuss ways to delay taking Social Security.

Ways To Delay Taking Social Security

If you are delaying taking Social Security, your main hurdle is to find sources of income that will help you to stay away from Social Security benefits. Here are some ways to delay taking Social Security benefits:

Keep Working

This is the easiest way to delay taking Social Security benefits, as it will help you keep paying your bills. The years immediately before retirement are the peak earning years for most adults. Generally, most adults have lower bills during this period because their children are grown and have become financially independent, and they no longer have a monthly mortgage payment.

Thus, by continuing to work for a few more years, you can significantly boost your retirement savings. You could also get some help from the IRS in this. Taxpayers above a certain age can make catch-up contributions to their 401(k), 403(b), many 457 plans, and their Roth or traditional IRA.

Continuing to work doesn’t mean that you still work the same number of hours that you have been working. Depending on your income needs and health, you can consider part-time jobs. You can also ask your current employer for an arrangement that reduces your work hours.

Use Other Accounts

You can also tap your other retirement accounts, such as your 401(k) or IRA. However, it is important that you only take out what you need. Otherwise, it could defeat the very purpose of delaying taking your Social Security benefits. It is also important to consider the amount of cash and other savings you have.

Financial planners generally recommend using taxable savings first. This allows tax-advantaged investments to continue receiving the compounding benefit. After exhausting your taxable savings, you can use tax-deferred accounts like a traditional IRA or 401(k).

Experts recommend retirees maintain a cash reserve of at least 12 months of their spending needs. This reserve will allow you to meet your regular expenses without turning to Social Security.

Reverse Mortgages

Reverse mortgages could also work as an extra source of cash for homeowners. Those who have completely or almost paid off their mortgage could be eligible for a reverse mortgage, which allows homeowners age 62 and older to convert part of their home equity into cash.

Homeowners can get the funds in the form of a lump sum, monthly payments or line of credit. Another advantage is that after your death, your heirs won’t be required to pay more than the value of your home, even if the balance is more than the home’s appraised value.

Moreover, no monthly mortgage payment is required while you live in the home, but interest rates continue to accrue as long as the loan exists. Additionally, the upfront costs associated with reverse mortgages could be high.

Leverage Your Life Insurance

You can also leverage your permanent or whole life insurance policy to get some extra money. You can either take a tax-free loan or withdraw part of the whole life policy’s cash reserves.

It must be noted that any amount you withdraw will reduce the size of your death benefit. Moreover, using the policy’s cash value reduces its value and raises the chances of a policy lapse.

Annuities Could Help

Annuities could work as supplementary income or pension income after your retirement. You can choose from different types of annuities, but most require sufficient funds upfront. In certain cases, you can even set up an annuity for the years after you retire and before claiming Social Security. You can use your retirement or non-retirement dollars to fund annuities.

Taking Your Spouse’s Social Security

If both you and your spouse are eligible for Social Security payments, then you need to find out whose benefit will be larger. In such a case, you can start taking the smaller benefit and delay the bigger one. This is because after the death of one spouse, the surviving spouse is entitled to the larger of the two benefits.

Delay Social Security A Bit Longer If You Can’t Wait Until Age 70

If circumstances don’t allow you to wait until age 70, then it is recommended that you try to delay taking benefits as long as you can. You earn delayed retirement credits every month between full retirement age and age 70. These credits accumulate at an effective annual rate of 8%, and they also apply to any cost-of-living increase (COLA) adjustment. Thus, you get more benefits later for each year you delay taking benefits.

Final Words

These are the easiest ways to delay taking Social Security benefits. However, before you even think of adopting any of these, it is important that you reconsider your decision to delay taking Social Security. This decision must not be made out of emotion or from your gut. Rather, you should be very clear on what you are doing.

Moreover, delaying taking Social Security benefits may not be the right move for everyone. If you can’t financially afford to delay taking these benefits, if your health is falling, or if your family history suggests that you may not meet the average life expectancy, then it is best to claim these benefits early.

On the other hand, if you have finally decided to delay taking these benefits, the above methods of delaying taking Social Security benefits will definitely help you a lot.

This article originally appeared on ValueWalk

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