Social Security at 62 Vs 67 How to Delay and Decide
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April 25, 2023

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Opting to start receiving Social Security at 62 vs 67 will give you 30% less per month for the rest of your life.

If you wait until 70, you receive 77% more per month than if you started at 62.

For someone who would receive $700 at age 62, they would instead receive $1,000 per month at 67 and $1,240 per month at 70, according to the Social Security Administration.

That begs the question: What are some realistic ways to delay Social Security so you can get that eventual large monthly payout? Better yet, how do you do it while still retiring or semi-retiring at age 62?

Set up passive income sources during your working years

Passive income will help you bring in extra cash every month while you keep your focus on your primary job.

One of the most lucrative sources of passive income is rental properties, but there are hundreds of ideas for passive income sources you can take advantage of based on your own interests and talents.

Example of passive income sources include:

  • Renting out your home or a room in your home on Airbnb
  • Creating a course and selling it online
  • Writing an e-book and selling it on Amazon
  • Setting up an e-commerce website
  • Selling your photography or art online
  • High-yield savings accounts
  • Real-estate investment trusts (REITs)
  • Starting a blog and running ads on it
  • Creating a YouTube channel

To determine which sources of passive income might work for you, consider what you have to share with the world, how you can best accomplish it, and how much time you are able to spare to learn and execute it.

Just do fun jobs after age 62

If you’ve put in 30-40 years in your career, ask yourself what might be a fun change of pace where you could still earn money.

Whether this means you cut your hours to accommodate your new venture or you do it on the side, here are some fun part-time jobs for those nearing or entering retirement:

  • Library clerk
  • Tutor
  • Interpreter
  • Pet sitter or dog walker
  • Delivery driver
  • Teaching assistant
  • Tour guide
  • Travel agent
  • Freelance writer or editor
  • Freelance photographer
  • Caregiver
  • Life coach
  • Landscaper
  • Retail worker
  • Artist

If you have a job in mind at a specific business, call or walk in to ask if there are any part-time openings or opportunities.

You could also sign up for alerts on a job site such as Indeed to receive email updates when a job you may be interested in becomes available.

Consult in your former field

If you still have a passion for your former industry, consider consulting for your past company or a competitor.

According to Harvard Business Review, consulting has eight fundamental objectives:

  1. Providing information to a client
  2. Solving a client’s problems
  3. Making a diagnosis
  4. Making recommendations based on the diagnosis
  5. Assisting with the implementation of recommended solutions
  6. Building a consensus and commitment around corrective action
  7. Facilitating client learning
  8. Improving organizational effectiveness

If you feel up to the task, reach out to your former employers or a competitor and show them how you can help.

It may help to get a professional certification, but depending on your previous roles, your job experience may be enough to prove your expertise.

You’d be surprised at who would pay handsomely for the wisdom you’ve built in your career.

Earn income from your hobby

Photography, surfing, hiking — just about any hobby that you’re proficient at could generate income.

What if you opened a business where you took youth on 2-week backpacking trips? Parents would pay a lot of money for this.

If you have an established hobby, you’re likely familiar with people telling you, “I’d love to buy one of your [insert products]!” Or, you may already have had some happy customers throughout the years.

But how do you actually turn this passion project into a business?

Steps to get you started:

  • Determine whether you have enough interested buyers
  • Determine your pricing
  • Draft your business plan
  • Consider the legal aspects, such as taxes and insurance
  • Decide where and how you plan to sell your products or services
  • Keep track of your income and expenses
  • Determine how you want to spread the word

The biggest consideration for retirees is whether you’ll still enjoy your hobby just as much when there’s more work and responsibility attached to it.

Drawdown retirement assets

Start with tax-deferred accounts such as IRA and 401k and save Roth IRAs and other tax-free retirement accounts for last.

In theory, retirement funds will grow, so you want to get taxed on a lower amount by withdrawing taxed accounts first.

Make sure you are taking only what you need, and that drawing down the funds now will be beneficial in the future.

Otherwise, delaying your benefits won’t make sense in the long run.

Use only dividend and interest income from retirement accounts

If you have a sizable nest egg, it throws off dividend and interest income monthly.

Try lowering your expenses to live off of this income only so as to not draw down the principal.

Since you’re not dipping into your principal, this method offers maximum access to your savings and the most flexibility.

Work with your financial advisor to make sure this is a sustainable option for you.

Use a reverse mortgage

You may have a source of retirement funding you haven’t thought about yet: home equity.

As long as you’re 62 or older, you have access to a reverse mortgage.

Traditional forward mortgages put equity into your home as you make your monthly payments, while reverse mortgages pull from your equity and eliminate your monthly mortgage payment.

A reverse mortgage lender will determine how much equity you can pull out based on your age, home value, and current interest rates. You can access cash as a line of credit, monthly payment, or lump sum.

The most common type of reverse mortgage, a HECM, is insured by the U.S. Department of Housing and Urban Development, which offers you and your heirs more protection.

The loan doesn’t have to be repaid until the borrower moves out, sells the home, or passes away.

When you hit 70, your retirement assets like 401ks and IRAs are still intact because you didn’t touch them during the eight-year social security delay period — instead, you used the wealth you had built up in your home.

See if a reverse mortgage can help preserve your retirement assets.

Get a home equity line of credit

If a reverse mortgage isn’t right for you, you can still access your home equity with a home equity line of credit (HELOC).

Unlike a reverse mortgage, HELOCs come with a monthly payment based on the amount borrowed.

Even though you’re adding a monthly payment with this strategy, you don’t have to take out a significant sum of money with a HELOC.

You can use it as a supplement now and again to help you pay for certain expenses, and make sure that it’s a monthly repayment you can afford.

HELOCs don’t come with the protections of a reverse mortgage because they are not insured by a government entity. But they’re still worth considering since they come with much lower fees compared to reverse mortgages and offer some of the same features.

Annuity

Annuities can provide a stable retirement income for those who need an additional source of funds while they wait to receive Social Security.

With an annuity, you can pay an upfront lump sum in return for a guaranteed payment for a specified amount of time.

For example, you can set your timeframe for eight years and get paid monthly until you’re 70, effectively eliminating the need to receive social security at 62 vs 67.

There are a few types of annuities, including:

  • Immediate: Payout starts immediately after the lump sum is deposited
  • Deferred: Annuities begin at a future date
  • Fixed: Provide regular payments
  • Variable: Payments fluctuate based on how well the investments are doing

Annuities are not taxed until the money is paid out of the account.

Use the cash value of a life insurance policy

There are numerous ways to access and use the cash built up in a cash-value life insurance policy, depending on which type you have:

  • Take out a loan against your life insurance policy
  • Take out part or all of your cash value
  • Pay your insurance premiums
  • Supplement your retirement income
  • Sell back your policy

Each method comes with its own pros, cons, and considerations, including the ramifications of reducing your death benefit or terminating your policy.

Be sure to discuss your specific options with your insurance agent to help you determine the best course of action.

Consider the larger benefit

If you’re married and you’re both nearing your eligibility for Social Security, you can choose to access the smaller of the two benefits to delay access to the larger one.

Additionally, if you delay receiving the larger benefit until at least age 70, you can someday leave the surviving spouse with the largest possible benefit.

Downsize

Downsizing lowers your overall cost of living so you can stretch your retirement savings.

Once your children have moved out, you may find that a three-bedroom house or an SUV isn’t necessary anymore.

Moving to a smaller home in a more rural area, selling your car and purchasing a smaller one, paying down debt, and traveling less are all downsizing opportunities that can help you lower your monthly costs while you wait for other income sources to kick in.

Reverse mortgages have a purchase option that can help you downsize and eliminate your monthly mortgage payments.

A HECM for purchase has similar requirements to a HECM, but you’ll sell your current home and make a larger down payment on your new home than you would with a forward mortgage.

In exchange, you will no longer have to make monthly mortgage payments. You’ll only be responsible for paying taxes and insurance.

A HECM for purchase is a helpful way to not only make a profit from downsizing to a smaller home but to access additional savings from eliminating monthly mortgage payments.

See if you qualify for a home purchase reverse mortgage.

Find out if you’re eligible for a reverse mortgage

Receiving Social Security at 62 vs 67 will impact your retirement goals, but a reverse mortgage can help you get back on track so you can delay those payments.

Get started to discover if a reverse mortgage is right for you.

Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.

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