Personal Finance

I've Got a $4 Million Nest Egg. Do I Need to Worry About When to Claim Social Security?

Maurie Backman

Published: January 26, 2025 9:25 am

There are many retired Americans today who get the bulk of their income from Social Security. And for some people, those benefits are the only source of income at their disposal.

Ideally, you won’t be entering retirement with zero savings, though. And if you’ve played your cards right and saved and invested well, it may be that you’re inching toward retirement with millions of dollars to your name.

A $4 million nest egg buys you a lot of financial freedom as a retiree. Even if you were to withdraw from a nest egg that size at a very conservative 2.5% per year, that gives you a $100,000 income on top of whatever Social Security pays you.

So that begs the question: Do you even have to worry about when to sign up for Social Security if you that much money?

The quick answer is that you probably don’t have to stress about your filing age as much as someone with a considerably smaller nest egg. But that doesn’t mean you shouldn’t put a fair amount of thought into your decision.

Why your filing age matters

The monthly benefit Social Security pays you will hinge on your personal wage history. But your filing age will help determine how much money you actually get each month.

Claiming Social Security at full retirement age (FRA) gives you the exact monthly benefit you should get based on your earnings history. But you can sign up for Social Security as early as age 62.

For each month you claim benefits before FRA, they’re reduced. And the earlier you file, the more of a reduction you face.

On the flipside, delaying your Social Security claim beyond FRA gives your monthly benefit a boost. You can get credit for a delayed claim until the age of 70, at which point there’s no sense in holding off any longer.

It’s for this reason that seniors are encouraged to think carefully about when to claim Social Security. Filing too soon could leave you with too little income, while filing too late could mean missing out on years of benefits you could’ve enjoyed sooner.

You still need to take your filing decision seriously — even if you’re loaded

A $4 million nest egg puts you way ahead of the game as far as the typical retiree’s savings go. But that doesn’t mean you shouldn’t put a fair amount of thought into your claim.

You may be inclined to sign up for Social Security as early as possible so you can enjoy that money while your health is still optimal. And that’s not necessarily a poor choice.

But do consider your longevity risk. If you have parents who are still alive in their 90s, that may end up being your fate, too. And it’s something you should want.

But living longer puts you at risk of spending down your savings. So having a larger monthly Social Security benefit to fall back on helps mitigate that financial risk.

Ultimately, you may want to sit down with a financial advisor and get their input as to when you should take benefits. They can help you review the pros and cons of filing at different ages you’re able to make a more confident decision. But at the same time, you can relax a bit knowing that either way, you have a lot of savings to work with.