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For some, waiting until you turn 70 is considered the smartest financial move you can make in retirement. After all, who doesn’t like a potential 24% boost (1) to monthly benefits?
A study by the National Bureau of Economic Research (2) (NBER) even suggested that waiting until age 70 was the right move for 90% of American workers currently between the ages of 45 and 62. So the mathematical evidence overwhelmingly supports a delay.
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But what if you did the “mathematically” right thing and still regret your decision? If signing up for benefits at 70 haunts you, here’s what you should know.
Reasons for regret
First and foremost, the NBER’s research is based on lifetime earnings. Simply put, these calculations are focused on maximizing the total amount of money you get in benefits during retirement, and that hinges on how much you get every month as well as your life expectancy.
In reality, if your health has deteriorated, your life expectancy is probably shorter than average. It also means that the utility of the boosted payouts has diminished. There’s also your healthy life expectancy to consider. This refers to the number of years, on average, Americans can live in “full” health. According to the World Health Organization, this is just 63.9 (3).
After all, what’s the point of a 24% extra payout if you can’t spend it on the vacations, sports and hobbies that you enjoyed in your 60s?
There’s also a chance you’ve fallen into the comparison trap. Watching your friends claim their benefits early and enjoy their retirement without financial stress could be one of the reasons for your regret.
What you can do
You can’t turn back the clock. But you can adapt your plan to offset some of the regret.
Perhaps a more aggressive withdrawal plan could give you more cash flow to spend. Alternatively, you could adjust your spending plan to make more room for new hobbies and social activities to enhance your retirement lifestyle.
Working with a financial advisor to redesign your financial plan can help you strike the perfect balance, while minimizing further regret. If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.
Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.
From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.
You can then schedule no-obligation consultations with your matches to determine who is the best fit for your long-term goals.
WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.
The homeowner advantage
Retirees who already own their homes however have a special advantage — especially if the mortgage is paid off. For those who need extra money in retirement, one option is to make your equity work harder for you.
If you’re a homeowner, you could easily tap into liquidity through a Home Equity Line of Credit (HELOC). This refers to a revolving line of credit that leverages the equity in your home as collateral, so that you can borrow and repay funds as needed — similar to a credit card.
AmeriSave offers a flexible HELOC that lets homeowners borrow against their equity as needed during a draw period, making it useful for renovations or debt consolidation. The application is mostly online and available in most states.
It’s a good fit for borrowers who want convenience and flexibility rather than a large lump-sum loan upfront. You can draw funds only when you need them, so it’s useful for ongoing or unpredictable costs. Interest is charged only on what you use, and you repay the balance over time. It’s essentially a flexible credit line secured by your home, delivered through a mostly online application process.
HELOCs can also be used as a pre-retirement tool to outfit your home for you golden years. Just make sure to fully understand the repayment terms before applying.
What younger Boomers should know
If you haven’t filed your Social Security claim yet, you need to know that timing is the most important lever available to you.
Waiting even one month beyond your full retirement age can bump up your monthly payments for the rest of your life. If you live a relatively healthy life well into your 90s, that extra monthly payment can make a huge difference.
Unfortunately, nearly two-thirds of U.S. adults (66%) did not know the age to maximize benefits, according to AARP research cited by CNBC (4). That means many younger Boomers and Gen X workers are heading into retirement without full information, which raises the risk of regret later.
Take the time to understand the system or, better yet, work with a professional advisor to craft the best plan for you. Careful planning could be all you need to minimize regrets in retirement.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Social Security Administration (1); National Bureau of Economic Research (2); World Health Organization (3); CNBC (4)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.