When you are a young adult you have a unique opportunity to develop a long-term financial plan that leads to a comfortable retirement. Clearly, the more time you have to save the more likely it is that you will be successful and ultimately reach your goals.
Unfortunately, when people are young they may be more prone to live in the moment without thinking ahead toward the future. As a result, in many cases this opportunity is lost.
Even those who did take the necessary steps may be impeded by fluctuations in market conditions. Many people who were on track for retirement on a particular date were knocked off course by the economic crisis that first reared its ugly head back in 2007 and 2008.
Sometimes you just have to react to circumstances and revise your strategy and expectations. The first thing that may come to mind along these lines would be to push your retirement date back a bit.
This can ultimately provide you with an increased monthly Social Security benefit. For one thing, your monthly benefit amount is calculated by the IRS using the 35 years during which you made the most amount of money.
Let’s say that three of these years took place while you were working part-time when your children were small. If you work for three years beyond your age of full Social Security eligibility you may be making far more money during these years than you were during those earlier years.
As a result, your benefit would be greater.
You also earn delayed retirement credits when you work beyond your age of full eligibility. These credits will increase your benefit by around 8% for every year that you work past your full retirement age.
It should be mentioned that you no longer accrue delayed requirement credits once you reach the age of 70, so there is no incentive to delay your application once you celebrate your 70th birthday.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.