6. Decide How to Handle Social Security
“Many couples often opt to take Social Security at the earliest possible age of 62, but this isn’t always the best idea,” said financial planner Jude Wilson of Wilson Group Financial. The worst part is, most people go this route because they never took the time to compare all their options and potential outcomes.
As Wilson reminds us, taking Social Security early (at age 62) means agreeing to a payout that could be up to 25% less than what you’d get if you waited. If you wait until you reach full retirement age (age 66 or 67, depending on your birthdate), you’ll receive the full benefit you worked for.
The lower payout affects more than today’s Social Security check noted Wilson. “Future cost of living adjustments will be based on that lower amount. Over your lifetime, the cumulative effect of getting cost of living adjustments on that lower benefit adds up like a snowball rolling downhill in an avalanche.”
But, that’s not all. Taking Social Security at age 62 can also do harm to a surviving spouse in the future.
“When one spouse passes away, the survivor will receive the higher of the two Social Security checks, not both,” said Wilson.
While there are certainly times when an early payout is better, retirees who pick this option without weighing the pros and cons could wind up missing out on huge sums of money over time.
If that won’t ruin your retirement, I don’t know what will. The good news is that you can start implementing these six financial tips into your planning today and reap the rewards in the years to come. For more information on smart spending decisions in retirement, check out our picks for the best credit cards for retirees.