Waiting until the age of 70 to claim retirement benefits will give you the largest possible monthly payment from the Social Security Administration. But delaying can be a big sacrifice. That’s because you first become eligible to get your benefits at age 62, so waiting until 70 would mean giving up a whopping eight years of income you could have been bringing in.
So, should you delay? In many cases, the answer is no — it’s simply not worth putting off the start of your payments just to get bigger checks later on. Here’s why.
Delaying may not pay off for a few key reasons
Putting off Social Security until 70 undoubtedly means your monthly payment could be a lot higher than if you claimed it early. That’s because you are entitled to a standard benefit at a designated full retirement age (FRA) — but your benefit goes down if you start it before FRA and up if you start it after. You can claim benefits at 62, but FRA is between age 66 and four months and age 67. Anything before that age is considered an early claim. And once you’re beyond your FRA, you can wait and earn an increase for each month you delay your first check until age 70.
The actual benefits increase that comes from waiting can be quite substantial. If you had a FRA of 67 and a standard benefit of $1,500, for example, your monthly check if you claimed at 62 would be $1,050 — but it would be $1,860 at 70. That’s $810 more. But the issue is, by waiting eight years, you give up $100,800. So even with getting $810 extra in every check starting at 70, you would need over 124 Social Security payments to break even. You’d need to get payments until close to age 81.
Many people don’t live that long, and in fact, you would have to exceed your life expectancy for a delayed Social Security claim to pay off. If you don’t want to gamble on that happening, delaying may not be your best choice.
Not only that, but data from the Senior Citizens League shows benefits have lost 40% of their buying power since 2000 because the formula used to award retirees periodic raises has not been sufficient to help ensure benefits keep pace with inflation (even though that’s what the formula was designed to do).
So, even if you do put off your claim and live long enough to break even, your future benefits may not be worth what they are today.
How to decide if you should wait
You’ll need to think carefully about whether waiting to claim Social Security makes sense for you. If you don’t expect to live a long time or if you expect continued high levels of inflation, you may decide you’d rather get your money now than take the chance of ending up with less later on.
You may also decide that you’d rather get your money at a younger age when you can enjoy it more, or claim early if doing so enables early retirement. These are both valid reasons to begin benefits long before age 70, even if that does mean your Social Security checks will be for less.
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