Financial advisors have for many years encouraged citizens to wait later before claiming Social Security. The concept is straightforward: wait until later and have a bigger monthly check. However, in 2025, several experts are predicting that this age-old retirement strategy might not work out as well as nowadays and could become a source of concern for many people, especially those that are not fully prepared.
Retirees are starting to shift from the general formula of delay and reaping benefits and move to an on-the-go plan as they deal with increasing costs, market volatilities, and health problems. While it is a fact that postponing benefits may result in a higher amount, it is not the right approach for every individual.
If the plan is to put aside asking for Social Security until the age of 70, this article will inform you of why the alternative may not be the best in the long run.
Why So Many People Are Found of Putting Off Social Security
Just switching from one plan to another is not the only advantage of starting off your benefits from the age of 70, there is also The cost-effective factor. Each year after the full retirement age (FRA), which for most people is 67, is added the approximately 8% increase in monthly payouts
So if at your FRA the benefit you can count on is $2,000, waiting three years could bring the amount you get per month to approximately $2,480 without the COLA increases.
n the one hand, it seems like a clever thing to do with your finances. Nevertheless, this picture changes once real-life interference occurs in the equation.
Problem #1: You Might Not Live Long Enough to Benefit
The primary concern for a patient who makes the decision to put off Social Security benefits is their doubtful longevity.
For example, if you decide to delay until the age of 70, then you have to at least live for the next 82-83 years to get compensated enough to make your overall payment the same. If you die before that, you may lose tens of thousands of dollars in unpaid benefits.
If you are someone who is constantly ill, have a history of health problems, or come from a family in which the life expectancy is lower, then it might just be right for you to claim earlier—despite the fact that the monthly checks might be smaller.
Problem #2: You May Need the Money Sooner
As more and more retirees become increasingly subject to the high living cost phenomenon, around 2025, there is a growing demand for services and products. Not only is housing also more expensive than it was a few years ago, but food, and the most marked increase is in the healthcare sector.
At the age of 65, if you retire, and the time of your Social Security is postponed until you are 70 years old, then these five years are the years you will be financing your expenses from your savings or other income sources. Most people are just unable to do that—especially if there is no pension to rely on and the retirement fund is not big.
Even if you have no other source of income and you retire at an early age when there is a possibility of living to be elderly, the lack of income may be due to the fact that you have spent all your savings, leaving you financially unprotected for the rest of your life.
Problem #3: Market Risk Could Force a Change in Plans
A problem still exists which is the stock market.
If your whole retirement plan is based on investments, checking your market regularly, and only benefiting from SS later, you are at risk in the investment market phase. Lowering of the market in the investment sector may force you to withdraw your money more than you had predicted. This will consume your budget faster than expected due to the additional expense section of the investment that has been affected by lowering.
In this instance, you are very likely to be forced to start collecting Social Security (SS) payments earlier than you had planned, which will result in lesser benefits as well as less savings to fall back upon.
Problem #4: You Could Be Impacting Your Spouse
It is assuredly true that your decision can be doubly rewarding for your partner.
If you are the breadwinner of the family, your spouse may become the beneficiary and receive a higher amount of survivor benefits if you delay your own’s. However, it will reduce the total income of the family during your lifetime.
This situation becomes a particular case of very difficult for a married couple when one person decides to retire early, while the other person decides to wait until the full retirement age to start collecting their benefits. The household could, however, go quite some time without any Social Security income at all.
Conversely, in some given scenarios, a coordinated application with your spouse may result in a well-balanced mix of income now and higher benefits later.
What Shouldn’t You Do?
No one answer is right for every person, according to experts.
You need to look at:
- Your health and expected lifespan
- Your total savings and income needs
- Whether you’re still working or plan to
- Your spouse’s benefit situation
- Market conditions and inflation
If in doubt, you could consult a financial advisor or utilize tools provided by the official Social Security website to explore different models.
Deferring Social Security can be a brilliant move, provided it is suitable for your particular circumstances.
2025 is expected to be a year with higher prices and a shaky economy and a growing number of retirees are realizing that putting off claiming could hit back even harder than aiding. Just verify that your situation and the facts really back it up before jumping onto the delayed benefits ship.
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