Kevin O'Leary Has a Blunt Message About Social Security - It Could Affect When You Claim

No matter how well you've prepared for retirement, you never know what financial surprises may be in store. Your senior years may end up costing more than expected, which is why it's important to file for Social Security at the right time and maximize your benefits. The more money you're able to get from Social Security each month, the more guaranteed income you'll have to look forward to.

Now, if you ask different financial experts, their opinions will probably differ on when to claim Social Security. Shark Tank personality Kevin O'Leary says that Social Security was never meant to be a retiree's sole source of income. For retirees with other sources of income, that perspective could make a case for waiting to claim Social Security.

Here's what delaying Social Security can do for your retirement, and how to make a delayed claim possible.

What delaying Social Security can do for you

You can claim Social Security as early as age 62. But you won't be able to collect your monthly benefits without a reduction until you reach full retirement age (FRA). FRA is 67 for anyone born 1960 or later.

But delaying Social Security can also work to your financial advantage. Each year you hold off past FRA until age 70 adds 8% to your monthly benefits on a permanent basis. On the flipside, claiming Social Security at 62 with an FRA of 67 results in a 30% reduction in those monthly checks.

The challenge of delaying

Holding off on claiming Social Security until age 70 sounds like a good plan in theory. The problem is that many people can't work until 70.

It's one thing to push yourself to work until age 70 if you have a desk job or a job that isn't very stressful. But it's another thing to do physical labor until you turn 70. Your body may not be able to handle that. And you may also not have the energy to work a non-physical but demanding job with long hours all the way until 70.

How to bridge the gap with investments

Since delaying Social Security until age 70 could result in more guaranteed monthly income, you shouldn't write off the idea of claiming at that time just because you may not be able to work full-time until 70. Building a retirement portfolio is a great way to cover your expenses while you wait on Social Security.

Let's say you need $2,500 a month to cover your needs, or $30,000 a year. Let's also say you have a dividend stock portfolio that generates a 4% yield.

A $750,000 portfolio could provide the income you need to cover your costs while you hold off on Social Security. That way, you can lock in larger monthly checks.

Even modest portfolio income can help

Of course, not everyone is able to build a $750,000 investment portfolio by the time they reach their late 60s. Fidelity puts average retirement savings in a 401(k) at $258,800 for people between the ages of 65 and 69. If we round that up to $260,000 and apply a 4% yield, that's only $10,400 per year in dividend income.

However, if you're able to earn that much in dividend income while working part-time, you may be able to tide yourself over for a few years so you're able to delay your Social Security claim until age 70. For example, if your portfolio gives you $10,400 per year but you need $30,000, a part-time job may be able to provide you with the remaining $19,600.

In that case, you'd need to earn $1,633 per month in income. If you're able to find a job paying around $20 per hour, that's about 20 hours of work per week, which may be doable for you at that stage of life.

Bottom line

Social Security will probably play a big role in your retirement plan. So it's important to maximize your benefits to the best of your ability.

While delaying your claim until age 70 isn't necessarily an easy thing to do, it could have a big impact on your finances. So it pays to see if the combination of an investment portfolio and part-time work could make it possible to wait.

That said, delaying Social Security isn't automatically right for everyone. If you don't expect to live a long life, then waiting until age 70 to file could result in less lifetime Social Security income despite boosting your benefits on a monthly basis.

But the average male today at 67 is expected to live about another 17 years, while the average female is expected to live another 19, according to the Social Security Administration. So if you reach age 67 and don't have health issues or a reason to believe you won't live well into your 80s, then the math generally favors waiting on Social Security and filing at age 70 for larger checks.

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