The best reason to take social security long before the age of 70

Social security offers you a choice if you want to take your retirement benefits. You can start as early as 62, but the longer you wait (up to 70 years), the higher your monthly check will be. For people born in 1960 or later, their full retirement age is 67. If you describe it, you will reduce the benefit to 62 to 70% of your projected full benefit amount, while waiting until the age of 70, to 124 % of that amount.

The compromise is that you pay longer by starting early, while getting a bigger check every month. At first glance, it seems better to wait until the age of 70 starts, because by doing so, you can make the most money out of the system if you live long enough. After all, there are good reasons to start earlier with social security. Of these, the best reason to take social security long before the age of 70 is summed up by this simple question: what will you do with the money when you are older?

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People usually spend less as they get older

According to data from the Census Bureau and the Bureau of Labor Statistics, people tend to spend less as they get older. The table below is based on the data for 2019 (the most recent year available) and shows the average expenditure per household, based on the age of the reference person in that household:

Data Source: Verification Based on Data from the 2019 Consumer Edition Survey

Expenditure tends to reach somewhere around that age group of 45-54, decreases as people approach the standard retirement age, and then decreases further with age. In fact, if you cut back on healthcare spending – one of the few areas where older people spend more than younger spending – the 75-plus range is the lowest age group of all.

If you stop and think about it, it makes sense. When you first start in life, you have the initial costs associated with your life. Then you can start a family. If you are in the best spending years, you will probably have children at university and / or take care of your own aging parents. Later in your career, the costs are likely to start to disappear.

Once you retire, your home can be paid for and you no longer have to cover the cost of work, hence the significant decrease in spending of about 65 years. Nevertheless, early retirement is often a time to travel, but later with your retirement, declining health or a loss of interest can make the trip less feasible or attractive, resulting in a further decline in spending.

In other words, if you are going to spend more cash earlier in your retirement than later, then you can not have your money for social security available sooner if it can be more useful? The life expectancy based on your age for social security is usually around your late 70s. This means that earlier in your retirement you will have more money if you spend it, while later you will claim to have the higher cash flow if you are less likely to use it.

What about the health care expenses?

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The big financial risk in aging is, of course, the cost of healthcare – especially assisted living and care facilities if you need these services. On the face of it, it can be helpful to recognize a cold, harsh reality: Nursing home care is expensive. It is so expensive that the difference between taking social security at 62 and taking the age of 70 will probably not be the difference that determines whether you can afford to pay for it yourself.

Keep in mind that according to LongTermCare.gov, a typical semi-private nursing home room cost a resident about $ 6,844 a month in 2016. As of January 2021, the average pensioner receives $ 1,543 per month from Social Security. You can double that typical social security benefit, and it would still not be sufficient to cover half the monthly cost of a typical nursing home.

Due to the care of nursing homes, this is the most likely option:

• Save enough to give self-insurance to cover the costs.
• Buy a long-term insurance policy if you are young and healthy enough to afford it.
• Sell ​​assets like your home that you no longer need to cover the cost.
• Spend your assets enough so that Medicaid will cover the costs for you.

If you rely on Medicaid, anything that has a greater benefit to social security probably means that Medicaid will have to take so much less off your page. Note: if you are married and only one spouse cares for a care home, Medicaid can enable the still independent spouse to maintain a home and have enough assets and income to live a modest lifestyle. So even then, your spouse will not be completely impoverished if you take care of your nursing home on Medicaid.

Draw up a retirement plan that does not depend too much on social security

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Typical benefits for social security are enough to keep the elderly just a little higher than the national poverty level. These benefits are not and were never meant to be – your only source of money at retirement. Build your retirement plan around reality, and your social benefit becomes a supplement and a safety net, rather than a critical benefit you need to maximize just to reach the ends.

That way, you can feel better if you take your social security benefit before you are 70, while you are still young enough to make good use of the money and enjoy it. If you’re older, less active, and likely to spend less, give yourself a better chance to share wonderful memories and stories. Even better, you will probably be able to do this while still living the same lifestyle you would have with the bigger check for the social security you could get to wait.