(Maurie Backmann)
You’ll often hear that it’s a good idea to delay your Social Security filing if you can.
The reason? Once you reach Full Retirement Age (FRA), you are entitled to your full monthly pension based on your personal income history. That age is either 66, 67, or somewhere in between, depending on the year of birth. But for every year that you delay applying for Social Security under FRA, your benefits will receive an 8% increase. This increase will then remain in effect for the remainder of your retirement.
If you turn 70 now, you will no longer be able to accumulate the credits that lead to increased achievements. This means that if your FRA is 67 but want to get the maximum Social Security benefit you can snag, you’re stuck for three years.
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But that is not necessarily easy. Many people are reaching their late 60s and can no longer imagine dedicating themselves to a full-time job.
But while the idea of working full-time until age 70 might not suit you well, it’s worth considering semi-retirement, where you work part-time. This could be your ticket to delaying Social Security — and snagging a higher monthly benefit that will give you more financial freedom in your older years.
The benefits of semi-retirement
Not every job or profession is well suited to partial retirement. But many fields do. And if yours falls into that category, it’s worth considering moving from full-time work to part-time work once FRA arrives. This way, you can delay your Social Security filing and still make enough money to cover your bills without having to tap into your nest egg.
But that is not the only advantage of semi-retirement. The gradual transition to part-time gives you a kind of trial run for actual retirement. You’ll see what it’s like to live on less income, and you’ll get a sense of how easy it is (or not) to fill your days in the times when you’re not working.
Remember that working is a very inexpensive way to pass your time. The less time you spend at work, the more money you may be spending on entertainment. That’s a wake-up call you can get while you’re still working in some way. A big reason it pays to increase your Social Security benefits is that you want to give yourself a way to stay well entertained when you’re no longer working at all.
The best from both worlds
If you want to squeeze as much money out of Social Security as possible but can’t see yourself working a 40-hour job until age 70, then transitioning into semi-retirement could be a good solution. And who knows? If this arrangement works well, you can choose to continue it even after you reach the age of 70 and receive monthly Social Security benefits.
Many seniors are finding that working part-time gives them the best of both worlds — a chance to stay employed and increase their income without committing too much to a job. And that’s an option worth considering for your retirement, too.
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