Social Security & Reverse Mortgages

Saving for Retirement is Key

Unfortunately, as you know, many seniors were unable to save at the suggested rate - 15% of your pre-tax salary - and are now living via their Social Security benefit only.

Should I Delay My Social Security Benefits?

It's essential to consider your individual financial circumstances and goals when deciding when to claim Social Security benefits. Consulting with a financial advisor or Social Security specialist can help you evaluate your options and make an informed decision, but delaying Social Security benefits can be a strategic financial decision, particularly for seniors who anticipate living longer. Here's how delaying Social Security benefits can be advantageous:

1. Increased Monthly Benefits. One of the primary benefits of delaying Social Security benefits is that it leads to higher monthly payments when you do start receiving them. Full retirement age (FRA) for Social Security purposes is typically between 66 and 67, depending on the year you were born. If you delay claiming benefits beyond your FRA, you can earn delayed retirement credits, which increase your benefit amount by a certain percentage for each year you delay, up until age 70. For example, if your FRA is 66 and you delay claiming benefits until age 70, you could receive up to 32% more in monthly benefits.

2. Longevity Protection. Delaying Social Security benefits can provide a form of longevity protection, especially for individuals who expect to live longer. By waiting to claim benefits, you increase the amount of guaranteed income you'll receive for the rest of your life. This can be particularly valuable if you have concerns about outliving your retirement savings or if you have a family history of longevity.

3. Inflation Adjustment. Social Security benefits are adjusted for inflation each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Delaying benefits leads to a higher initial benefit amount, which means that your future cost-of-living adjustments (COLAs) will also be higher. This can help your benefits keep pace with inflation over time, providing more purchasing power in your later years.

4. Potential Spousal Benefits. Delaying Social Security benefits can also benefit your spouse, especially if you are the higher-earning spouse. Spousal benefits are based on the higher-earning spouse's benefit amount, so by delaying benefits and increasing your own benefit amount, you may also increase the potential spousal benefit for your spouse if they claim based on your work record.

5. Tax Efficiency. For retirees with other sources of income, delaying Social Security benefits can also offer tax advantages. By delaying benefits, you may be able to reduce your reliance on taxable retirement account withdrawals in the early years of retirement, potentially lowering your overall tax burden.

   

By using either the "Term" or "Tenure" features, delaying SS benefits can be accomplished. Some will say that delaying the Social Security benefits is a bet on how long you will live and that if you don't live into your 80s, you might be leaving money on the table. This is true in some cases, however if there is a younger spouse in the picture, the longer a senior delays accessing their Social Security benefit, the more benefits will be passed along to their surviving spouse. This article from AARP speaks specifically as to how the Surviving Spouse benefit is calculated. Social Security When A Spouse Dies - A Guide To Survivor Benefits (aarp.org)

Bridging the Financial Gap

Delaying Social Security benefits then opens up another financial potential: Reverse Mortgages. Reverse Mortgages can help bridge the gap while providing a sustainable solution that taps into the Tax-Free equity in a qualifying senior's home.

This is a very strong reason for seniors to tap into the LOC (Line of Credit) feature associated with the Variable Rate Reverse Mortgage product. This product provides flexibility and access to funds, allowing you to tap into your home equity as needed while potentially minimizing interest costs.

Visit the 'Reverse Mortgages' page on my website, under 'Loan Programs' to learn more about the benefits of Reverse Mortgages as a Senior Citizen. The Lending Authority - Reverse Mortgage Resources