Is Delaying Social Security Always the Smartest Move?
Written by
Laura Bogart
Edited by
Kristen Mae
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As you plan for your retirement, you’ve probably heard a common piece of advice: delay collecting Social Security for as long as possible. The logic is straightforward: if you wait until you turn 70 instead of claiming at 67 (your full retirement age) or 62 (the earliest age you’re eligible), you’ll maximize your benefit.
Charles Schwab explains further: “If you retire sometime between your full retirement age and age 70, you typically earn a ‘delayed retirement’ credit (DRC) for your own benefits (but not spousal benefits). The higher baseline would last for the rest of your retirement and serve as the basis for future increases linked to inflation.”
This advice seems cut-and-dried, but it isn’t always applicable to everyone. Ultimately, the best time to take Social Security depends on several personal factors. Sometimes, claiming benefits earlier can even be the smarter move. GOBankingRates investigated the core issues to consider when planning your Social Security strategy.
Your Health and Longevity Impact Decision-Making
In an ideal world, you’d be healthy and active well into your retirement years — but sadly, that isn’t always the case, and it can affect when you should claim Social Security.
Chad D. Cummings, Esq., CPA, CEO of Cummings & Cummings Law, has helped many clients build strong retirement and estate plans. He says being honest about your health and life expectancy is critical in making the wisest decision.
“If you have serious health issues, claiming benefits earlier often makes sense because delaying until 70 is only worthwhile if you live to around 80. If illness means you likely will not reach that age, waiting could leave you with nothing,” he said. “Claiming early guarantees some income while you are alive, whereas someone in excellent health who expects to live into their late 80s has more reason to wait.”
Cummings understands the value in conventional wisdom, but he encourages people to base their decision on their personal health outlook — not a one-size-fits-all rule.
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Other Sources of Income Also Play a Role
When deciding the right time to collect Social Security, Cummings advises taking an inventory of your overall financial situation. If you have other income sources providing a comfortable cushion, you can afford to delay claiming Social Security and let your monthly payment grow.
“However, if you have little saved or no other income, you might need Social Security as soon as you are eligible just to cover basic expenses,” he said. “In that case, claiming early gives you a steady income and prevents you from running through your savings too quickly.”
In other words, if holding out for Social Security would burden you financially — or even push you into debt — you’d be better off claiming it earlier.
You Need a Cash Flow Buffer During Down Markets
Ash Ahluwalia, CFP, MBA, NSSA, managing director and head of Social Security planning at OneTeam Financial, agrees that many factors come into play when deciding to file for Social Security. Like Cummings, he cites poor health as a primary reason to file early.
However, he also notes that having a cash flow buffer during a market downturn can be another reason to claim Social Security sooner — even if it reduces your monthly payment.
“If your investment portfolios are down, starting Social Security early may allow you to delay distributions from investment accounts,” he said. “By starting Social Security early, it may buy you some time to wait for a market rebound before having to tap into these investment accounts.”
Essentially, you could be trading a reduced Social Security benefit to give your investments more time to recover — while still collecting some income. Ahluwalia recommends consulting a Social Security specialist for personalized guidance.
Think of Your Surviving Spouse
Cummings notes that coordinating spousal benefits for Social Security can feel like a carefully choreographed dance. When timing each spouse’s filing, you’ll want to maximize survivor benefits — which usually requires the higher-earning spouse to delay claiming.
“If the higher-earning spouse claims early, it permanently reduces the survivor benefit and can leave the widow or widower with far less income,” he said. “To protect the survivor, the higher earner should generally wait as long as possible to maximize that future benefit.”
He adds that when one spouse claims early while the other delays, it can provide short-term income — but at the cost of a permanently reduced benefit.
“Couples must weigh immediate needs against the surviving spouse’s long-term security,” he said.
Consider Tax and Medicare Implications
Ahluwalia also encourages people to factor in taxes when deciding when to claim Social Security. Depending on your provisional income, Social Security benefits may be subject to federal income tax, though most states do not tax it.
If you add Social Security income to your other sources of retirement income, it could push you into a higher tax bracket.
This can also affect Medicare premiums.
“If you are on Medicare, higher total income could also increase your Medicare premiums due to IRMAA,” Ahluwalia said. “The higher your income, the higher your cost for Medicare. Therefore, delaying the start of Social Security may make sense if it significantly increases your tax liabilities and/or Medicare premiums.”
Bottom Line
When is the best time to claim your Social Security benefits? It depends. Your health and life expectancy play major roles, as do any other sources of retirement income. Your desire for flexibility and the need to protect a surviving spouse should factor in. Above all, you should make these decisions in consultation with a qualified financial planner or advisor.
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