Mark Cuban / Mark Cuban
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Anyone who contributes to the Social Security program is entitled to benefits, and those who contribute more to the system receive more benefits.
Billionaire entrepreneur Mark Cuban is 67 years old, so he can start taking Social Security at any time, but he’ll get the maximum benefit if he waits until he’s 70.
How much can you get from Social Security?
Your age, the year you first claimed Social Security, your earnings and inflation all play a role in how much you receive from Social Security.
You can take Social Security as soon as you turn 62, but you’ll get a larger benefit if you wait longer. Those who withdraw immediately are eligible for up to $2,831 per month, according to social Security Administration. However, waiting until age 70 could give you a maximum benefit of $5,108 per month.
Since Cuban has paid a lot of taxes over the years, he would be entitled to a $5,108 monthly benefit, assuming he waits until he turns 70. Six-figure earners are in the same boat and will make as much as Cuban from Social Security.
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However, Cuba’s Social Security income after taxes will not be that high. Depending on how much you earn, up to 85% of your Social Security benefits are subject to taxation. Cuban is a high-income individual, so 85% of his benefits will be taxable, and since he works in the highest tax bracket, he won’t see $5,108 per month in actual benefits. After including taxes his actual profit would be almost half.
Should you claim Social Security early?
Your health is a major factor that determines whether you should claim Social Security early.
If a taxpayer waits until age 70 but dies at age 69, he or she won’t get a penny from the program. People who have a history of health problems or have short longevity in their genes should consider taking it out earlier. However, people who are healthy and have long-lived family members should consider waiting until age 70.
It’s also a good idea to delay Social Security if you have a large 401(k) account. This way, you can take larger withdrawals from your core egg by your 70th birthday to reduce your taxes when required minimum distributions begin.
Don’t rely on Social Security
Social Security benefits are like pocket change for Cuba. He would not recognize a change in his net worth from the additional $5,108 per month, assuming he waits until age 70 to join the program.
Cuban became a successful entrepreneur, investing his own money and starting companies that comfortably covered his expenses. This type of setup puts you in the driver’s seat of your retirement rather than praying that Social Security benefits are enough to cover your living expenses.
Social Security should not be a fundamental part of your retirement strategy that determines whether you can afford necessities. Viewing Social Security as fun money ensures that you’re financially responsible and building your nest egg during your most productive years. You can also work part-time instead of retiring completely, so you have an additional income source.