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Maximizing Your Social Security Benefits

Factors to Consider and the Bridge Method

When it comes to planning for retirement, one of the most impactful decisions you’ll make is when to start taking your Social Security benefits. There are important factors to consider in determining the best time for this, including your life expectancy, investments, income, and family structure. Each of these plays a role in the timing of your retirement and Social Security strategy.

For example, if you have a family history of longevity, you may choose to delay taking Social Security. If you’re still working and earning income, you might want to consider delaying Social Security due to potential tax implications. Your expenses and investments also factor into the decision, as well as your spouse’s when they may take their own benefits.

While all these factors are important, you may also want to explore the Social Security bridge method. While you can start collecting benefits at age 62, this is considered early and results in a lower payout. The Full Retirement Age (FRA) is typically around 66 or 67, at which point you can receive 100% of your benefits. By waiting beyond your FRA, you can earn even more, up to approximately 132% of your benefits by age 70.

By implementing the bridge method, you can “bridge” the gap between age 62 and your FRA. Instead of taking Social Security early, you can withdraw money from an IRA or 401(k) during this period. This allows your Social Security benefits to continue growing at a rate of 8% per year. It’s important not to withdraw more from your IRA/401(k) than your Social Security benefit. Additionally, consider prioritizing withdrawals from more conservative investments to maximize returns.

As with any aspect of retirement planning, it’s advisable to consult a financial advisory firm that can tailor a plan to your specific goals and risk tolerance. They can help ensure you make informed decisions that maximize your Social Security benefits and set you up for a secure retirement.

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