When Should I Claim Social Security if I Have $800,000 in Savings?

Social Security serves as an essential income source for millions of retired Americans. And you should know that your filing age will help determine how much Social Security you get each month.

Before you decide when to sign up for Social Security, you’ll need to consider the state of your savings. And if you’ve saved a bit but not a ton, you may want to focus on getting as much money out of Social Security as possible.

In this Reddit post, we have someone turning 60 who’s managed to save $800,000 for retirement in their 401(k). An $800,000 nest egg isn’t pocket change, but it’s not a ton of money.

At a withdrawal rate of 4%, an $800,000 401(k) gives this saver $32,000 a year. So they may want to supplement that income with a larger monthly Social Security check. That would make the case for filing for benefits on the later side. But there are other factors to consider as well.

Getting the timing right

Your filing age makes a big difference when it comes to Social Security. You can sign up for benefits once you turn 62. But you’ll need to wait until full retirement age (FRA) to avoid having those benefits permanently reduced. FRA is 67 for anyone born in 1960 or later.

You can also boost your Social Security checks by 8% for each year you delay your claim past FRA, up until you turn 70. With an $800,000 nest egg, this may be something to consider.

While $32,000 a year from savings is a decent sum, it’s not a ton of money. And it may not be enough to keep you busy in retirement. So you may want to aim for a Social Security claim after FRA.

Now that said, in this situation, we have a saver with $800,000 by age 60. It may be that they won’t retire for another few years, during which time that balance grows even more. But even if it hits $1 million, at 4%, that’s only $40,000 of annual income. It’s a nice sum, but also not a ton.

Savings aside, you’ll need to keep some other points in mind when deciding when to claim Social Security. For one thing, are you able to keep working? Because if you’re not, then you could end up depleting a large chunk of your nest egg by waiting on Social Security.

You should also consider how good your health is — or not. The better your health, the more likely you are to live a long life. But if you don’t think you’ll live very long, then delaying Social Security is riskier, as it means potentially not getting as much lifetime income from the program.

It pays to get help with the decision

Signing up for Social Security could end up being one of the toughest and most important retirement decisions you’ll have to make. And you should know that you don’t have to make it alone.

If you consult a financial advisor, they can help you weigh the pros and cons of filing at different ages. They can also help you manage your $800,000 portfolio so it produces a nice amount of retirement income and lasts as long as you need it to.

Even if you’ve never worked with a financial professional before, there’s nothing wrong with getting started right before retirement. Retirement represents a major change in your financial situation, so it’s a more than appropriate time to get an advisor’s input.

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