When Should I File for Social Security Benefits if I Have a Sizable Nest Egg?

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Your decision has the potential to go either way.

For good reason, many seniors struggle with the decision of when to claim Social Security. Many retirees rely on these benefits as their primary or secondary source of income.

But what if you don’t have to rely on Social Security because you have a sizable savings account? It’s possible that you started contributing to an IRA or 401(k) plan at a young age and have been wisely investing your savings for many years.

 

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If this is the case, and you now have a multimillion-dollar nest egg at your disposal, Social Security may serve as a secondary income source – albeit a minor one. In that case, you really can’t go wrong when deciding on a filing age – regardless of which one you choose.

 

A less stressful choice

When you rely on Social Security to cover the majority of your retirement expenses, you must be extremely cautious about when you apply for benefits. But when you’re in the fortunate position of having a lot of money to your name, it relieves a lot of the pressure.

Still, it’s critical to weigh your filing options in order to make the best decision for your retirement. Once you reach full retirement age, or FRA, you are entitled to your full monthly benefit based on your personal wage history. Depending on your birth year, FRA is 66, 67, or somewhere in between.

Meanwhile, you can begin applying for Social Security at the age of 62. However, they are reduced for each month you file for benefits before FRA.

You can also postpone your filing until after FRA. Your benefits are increased for each month you work, up to the age of 70.

However, if you have a sizable nest egg, you have some options. You may decide to file for benefits as soon as possible in order to receive your money sooner. Perhaps you’ll use it to travel freely or to sublet an apartment in a bustling city that you’ve always wanted to visit. It’s worthwhile to file for Social Security if it allows you to meet certain retirement goals.

On the other hand, if you have enough savings to cover your living expenses, travel, or meet other goals, you may believe that you should leave your benefits alone and let them grow. In that case, you could apply for Social Security at FRA or even later if not having that money isn’t a hindrance. From there, you’ll have a larger monthly benefit to enjoy for the rest of your life, and if you don’t need it, you can give it to your grandchildren or donate it to a cause close to your heart.

Weigh your options without feeling rushed.

The benefit of entering retirement with a sizable IRA or 401(k) is that you won’t have to agonize over whether to file for Social Security. Yes, it is still necessary to think about it. But keep in mind that if you have a large amount of savings, there is no such thing as choosing the wrong filing age.

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