5 Actual Mistakes Retirees Need to Avoid
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The Social Security “Math” Trap
“When should I take Social Security?” It’s the million-dollar question, and everyone seems to have an opinion. Most calculators and experts will tell you to wait until 70 because you’ll receive the largest payout. Sounds like a no-brainer, right? Well, not so fast.
If you retire before 70 (as many people do), you’ll likely need to dip into your savings to cover your living expenses until Social Security kicks in. This can amount to hundreds of thousands of dollars. For example, let’s say you retire at 65 but wait until 70 to start Social Security. In those five years, you might spend $200,000 or more from your savings to bridge the gap. While it’s true that waiting until 70 gives you more in Social Security payments over your lifetime, that $200,000 from your savings could have been passed on to your heirs or invested elsewhere.
And here’s the kicker—Social Security stops when you and your spouse pass away, but that $200,000 you spent from your own savings could have been left to your children or grandchildren. So, while waiting until 70 might give you the highest payout on paper, it’s not always the most efficient strategy. THE REAL QUESTION IS: How much of your own money are you willing to sacrifice to get that higher Social Security payout? Sometimes, the breakeven point just isn’t worth it.
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