Making an educated Social Security claiming decision can make your savings and assets last much longer. If you have been saving for retirement and have accumulated assets and savings, you want them to last for life. Increasing your Social Security income can have a dramatically positive impact on the probability that they will last as long as you do.
How do you increase your Social Security income?
If you delay claiming your Social Security benefits older than 62, and you will increase your Social Security income, and increase the longevity of your assets. You don’t have to delay claiming until age 70. Even if you delay for a few years past 62, that will still help your assets and savings last longer.
Here is how it works:
If you withdraw money from your savings every month to pay bills, increasing your Social Security income means you withdraw less money every month. This will make your assets and savings last longer.
How having a Higher Social Security Income Makes your Savings and Assets Last Longer
For example, let’s assume you have a monthly income need of $5,000. Every month you need at least $5,000 to pay your bills and have a bit left over.
If you claim at a young age, like age 62, it will provide you with monthly income of $2,000. That means you will have to withdraw $3,000 ($5,000 - $2,000) every month from your assets and savings to meet your monthly income need. Withdrawing $3,000 per month will result in you withdrawing $36,000 ($3,000 x 12) for the year.
Now, let’s assume you made a different decision about when to claim your Social Security. What if you claimed at an older age, and were able to increase your monthly Social Security income to $3,000 per month. Now you only need to withdraw $2,000 ($5,000 - $3,000) per month to meet your income of $5,000. That will also result in you only needing to withdraw $24,000 ($2,000 x 12) for the year.
Now, I was not a math major. But you don’t have to be. Withdrawing $24,000 per year from you assets and savings instead of $36,000, will make those them last a lot longer in your retirement.
It’s that simple. Increase your Social Security income and increase the longevity of your hard earned assets and savings.