Should They Wait to Collect Social Security and Use 401(k) Plans for Two Years?

  • Couple has $1.7 million in 401(k) plans and $300,000 in cash and stocks
  • Home is valued at $900,000 and paid off
  • Husband will receive $3,600 if he claims Social Security at Full Retirement Age (FRA)
  • Wife will receive $1,600 if she claims at 64 ½ years old
  • Waiting to claim Social Security can increase benefits by up to 8% for every year past FRA until age 70
  • Spousal and widow/widower benefits may be affected by delayed retirement credits
  • Consider estate planning aspects of claiming Social Security
  • 4% rule suggests taking 4% of balance in the first year and adjusting for inflation
  • Options to claim benefits separately or simultaneously
  • Factors to consider: longevity, health, retirement needs, impact on 401(k) balances

A retired couple with $1.7 million in their 401(k) plans and a paid-off home valued at $900,000 is considering whether to wait longer before claiming Social Security benefits and living off their retirement accounts instead. Waiting until Full Retirement Age can increase benefits by up to 8% for each year past FRA, with potential perks for spousal and widow/widower benefits. The 4% rule suggests taking 4% of the balance in the first year and adjusting for inflation. They have options to claim benefits separately or simultaneously, but should also consider longevity, health, and retirement needs when making their decision.

Factuality Level: 8
Factuality Justification: The article provides accurate information on Social Security benefits, delayed retirement credits, and the 4% rule for estimating retirement expenses. It offers advice based on the reader’s financial situation and encourages considering individual circumstances before making decisions. The author presents multiple options for claiming Social Security benefits and acknowledges that everyone’s situation is different.
Noise Level: 4
Noise Justification: The article provides personalized financial advice to the reader based on their specific situation and retirement plans. It discusses the pros and cons of waiting to claim Social Security benefits and offers a rough guideline for estimating retirement expenses. However, it lacks broader analysis or exploration of long-term trends or consequences of decisions on society as a whole.
Key People:

Financial Relevance: Yes
Financial Markets Impacted: Social Security benefits and 401(k) plans
Financial Rating Justification: The article discusses retirement planning, Social Security claiming decisions, and the impact of these choices on financial assets such as 401(k) balances and housing expenses. It also mentions the 4% rule for determining retirement needs, which is relevant to personal finance and financial markets.
Presence Of Extreme Event: No
Nature Of Extreme Event: Other
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no extreme event in the text.

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