Saving for retirement has taken a backseat for many Americans, perhaps due to more pressing issues such as dealing with inflationary pressures. Meanwhile, longer life expectancy combined with inadequate retirement preparedness might bode poorly for some retirees’ golden years.
But now, experts say that one step could boost monthly benefits by 24%: delaying Social Security benefits.
The Motley Fool reported that for each year you hold off on signing up, your benefits get an 8% boost.
If you retire at age 62, the earliest possible Social Security retirement age, your benefit will be lower than if you wait, according to the Social Security Administration (SSA). Meanwhile, if you wait until your full retirement age (FRA) — 67 if you were in 1960 or later and 66 if you were born between 1943 and 1954 — you will get the full benefits.
However, as The Motley Fool explained, you can’t keep accruing delayed retirement credits indefinitely — as they plateau at age 70.
“But what this means is that if you’re looking at 67 as your FRA and you sign up for Social Security at age 70 instead, you’ll lock in a 24% boost to your monthly benefits that will remain in effect for the entirety of your retirement. That’s a massive increase to your income,” The Motley Fool noted. “By claiming Social Security at 70, you’ll get to enjoy a much higher income for 20 years. When you think about it that way, a three-year sacrifice seems reasonable.”
Indeed, when one looks closer at retirement costs, these three years of “sacrifice” might be worth it. For example, an average retired couple age 65 in 2022 may need a whopping $315,000 saved — after tax — to cover health care expenses in retirement, according to the Fidelity Retiree Health Care Cost Estimate.
What’s more, a recent Edward Jones report found that the lifetime cost of retirement averages almost $1 million dollars, while the median retirement savings — among the 51% who do have accounts — is only $164,000 for those aged 65-74 and $134,000 for those aged 55-64.
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This article originally appeared on GOBankingRates.com: If You’re Nearing Retirement, This One Step Can Boost Monthly Benefits By 24%