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8 Benefits of Claiming Social Security Later

By U.S. News & World Report

You will qualify for bigger monthly payments from Social Security if you sign up at an older age. Delaying claiming Social Security is particularly beneficial to people who have a long life expectancy or want to leave larger payments to a surviving spouse. Here are some of the perks available to retirees who are willing to wait until their late 60s or age 70 to start their Social Security benefit.

Avoid a benefit reduction. The age when workers are eligible for full benefits is 66 for most baby boomers and 67 for everyone born in 1960 or later. Social Security payments are reduced if you claim them before your full retirement age. If you start your benefit at age 62, your payments will be 25 percent smaller if your full retirement age is 66, and you will get 30 percent less if your full retirement age is 67.

[Read: How to Undo Claiming Social Security Early.]

Collect delayed retirement credits. Workers who delay starting Social Security after their full retirement age can increase their monthly payments by 8 percent per year up until age 70. Baby boomers can get 32 percent bigger checks by starting payments at age 70, and people born in 1960 or later are eligible for 24 percent more. Of course, whether you come out ahead using this strategy depends on how long you live. “Every month you delay your Social Security gets you a higher monthly payment for life,” says Andy Landis, author of “Social Security: The Inside Story.” “That yields a higher lifetime payout if you live to average life expectancy or beyond.” Those with a long life expectancy have the most to gain by delaying their Social Security payments.

Work and claim benefits at the same time. If you work after claiming Social Security benefits, part or all of your payments could be temporarily withheld if you earn too much. However, once you turn your full retirement age you can earn any amount without impacting your Social Security payments.

Boost your annual earnings. Social Security payments are calculated using the 35 years in which you earned the most. If you didn’t work for at least 35 years, zeros are factored into the calculation and lower your monthly payments. “Social Security is based on 35 years of the highest earning,” says Matthew Hague, a certified financial planner at Guide Wealth Management in New York. “If you were to retire early you might expect that is also going to impact your level of Social Security.” If you work for more than 35 years, your highest earning years are used to calculate your benefit. So, if you earn more later in your career than you did in your 20s, you can prevent a few of those low income years from being used to determine your payments.

[Read: 6 Social Security Calculators That Can Help You Decide When to Claim.]

Larger payments when you are older. In the early part of your retirement you might still have the ability and energy to work, especially if you are able to find a job that you enjoy. Delaying Social Security means you won’t receive payments in your early 60s, but you will bring in bigger monthly payments later on in retirement, perhaps when you no longer have the option to go back to work or could use the bigger checks to help pay for health care costs.

Bigger inflation adjustments. Social Security payments are adjusted to keep up with inflation each year. The dollar value of the inflation adjustment is larger for those who receive bigger monthly payments. For example, a 3 percent cost-of-living adjustment is worth $30 for someone who receives $1,000 Social Security payments, but would be $45 for a retiree with $1,500 monthly payments. These annual cost-of-living adjustments can add up more than 20 years of retirement.

Less stress on your 401(k) and IRA savings. “If you can wait and claim at age 70, you get basically an 8 percent increase in the benefit for every year that you delay,” says Cheryl Costa, a certified financial planner and founding principal of Woodside Wealth Management in Framingham, Massachusetts. While some people might earn more than that in the stock market, those gains are certainly not guaranteed and could be much lower. Bigger Social Security payments can help you spend less of your retirement savings each year, which could help your nest egg last longer.

[Read: 6 Social Security Changes Coming in 2017.]

Maximize survivor’s payments. When one member of a married couple passes away, the surviving spouse inherits the Social Security payment if it’s larger than his or her current benefit. “There are many cases where the widow or the widower might live 10 or 11 years past the other spouse,” says Wei-Yin Hu, vice president of financial research at Financial Engines. “It becomes really important to make sure that the higher earner in the couple delays their benefit as long as they can.” If the higher earning member of the couple delays claiming Social Security, he or she can pass on a bigger Social Security payment to the surviving spouse.

Emily Brandon is the author of “Pensionless: The 10-Step Solution for a Stress-Free Retirement.” /p>

More from U.S. News

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The Most Popular Ages to Sign Up for Social Security

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8 Benefits of Claiming Social Security Later originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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