The Annuity Everyone Needs — and Anybody Can Get

Finding and purchasing the right annuity — especially one with built-in inflation protection — can be a difficult and expensive chore.

But if you are smart and flexible, virtually any American retiree can grab such an annuity on the cheap.

By waiting until age 70 to claim Social Security, you can create an annuity that will pay out the maximum monthly income for which you are eligible.

Even better, the federal government will adjust the payment upward each year to account for inflation — all at no extra cost to you. That is a virtually unheard-of benefit in the world of annuities, where inflation adjustments typically are available only as an expensive add-on feature.

All of this means delaying claiming your Social Security benefits can be a great way to add a little extra financial peace of mind to your golden years.

As Social Security expert Jeff Miller — co-founder of Social Security Choices, a company that provides advice on Social Security claiming decisions — wrote in a Q&A for Money Talks News:

“Social Security is an annuity, and delayed claiming is by far the cheapest annuity you can buy.”

How to get this benefit

To some degree, anyone who collects Social Security gets this built-in annuity benefit. Even if you claim early — such as when you are first eligible at age 62, or any time thereafter up to age 70 — you will get a guaranteed inflation-adjusted payment each month, year after year.

But delaying Social Security until age 70 is the best way to get the biggest payoff if you want to use your benefits in place of a traditional annuity.

By waiting, you get a larger monthly check for the rest of your lifetime. As the Social Security Administration explains, for each year you delay claiming Social Security beyond what’s known as your “full retirement age,” your benefit increases by up to 8%.

Now, there can be good reasons not to delay claiming your Social Security benefits. We outline a few of them in “5 Times When It’s Smart to Claim Social Security Early.”

So, you need to determine which claiming strategy makes the best sense for you — and a company like Social Security Choices can help with that decision.

But if you have saved a lot of money for retirement and want extra peace of mind, delaying Social Security can be a great way to create the maximum inflation-protected income for which you are eligible. And you get that protection without having to pay another dime beyond what you contributed in FICA taxes during your working years.

Sound like a strategy that might work for you? The key to making it a reality is to work later into life and keep a steady income until age 70 — or to have a nest egg big enough to see you through the early years of retirement until you begin claiming Social Security later.

You can get help with saving for retirement by reading:

• “8 Key Steps to Planning for Retirement as a Couple”
• “How Can I Find Money to Save for Retirement?”