I’m a Retirement Planner: Here Are 5 Reasons You Could Regret Delaying Social Security
Written by
Vance Cariaga
Edited by
Amber Barkley
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One of biggest decisions you’ll make as a senior is deciding when to claim Social Security benefits. You can claim retirement benefits as early as age 62, but most financial experts recommend delaying as long as possible to maximize your monthly payment. The longer you wait, the bigger the payment — to a point. Once you reach age 70, there’s no more advantage to delaying.
However, there are some instances when it makes sense to file for benefits earlier rather than later. Here are five reasons you could regret delaying Social Security, according to a retirement planning expert.
You Need the Income Now
Waiting to claim benefits might not be financially feasible if you need Social Security income to pay the bills, according to Nancy Gates, lead educator at Boldin, a financial planning platform that can help you strategize a retirement plan.
Delaying Social Security “could force you to rely on credit cards or high-interest loans or withdraw more from retirement accounts, potentially reducing your long-term financial security,” she said.
You Have a Short Life Expectancy
One of the main reasons to delay applying for Social Security is that the bigger monthly check might boost your finances well into your 80s or 90s. But Gates pointed out that if you have a medical condition or family health history that could shorten your life expectancy, it doesn’t make sense to wait.
The Stock Market Works Against You
If you expect to depend heavily on stock market investments to fund your retirement, then delaying Social Security benefits could be problematic.
This might happen if you “ultimately need to liquidate investments” during a down market to help fill in the cash flow gap that your Social Security check would otherwise cover, according to the Journal of Accountancy.
In this case, the increased benefit from delaying Social Security could be negated.
You Have a Dependent Under 18
As Gates noted, qualified dependent children or grandchildren can receive up to half of a parent or guardian’s Social Security benefit. If this is your situation, then you’ll need to strategize over the best time to file for benefits.
“If you have underage children, then you will want to consider if the increased monthly benefit you get because of them outweighs delaying the start of Social Security,” Gates said. “Think about how long you will collect for the child and whether the lifetime value of the dependent’s benefits is greater than the amount you gain by delaying.”
You Have Spousal Benefits To Consider
Another reason delaying your benefit could be a mistake has to do with spousal benefits, according to Gates. For example, if your spouse is higher earning and delays their benefit, it might be better if you claim Social Security earlier to provide income while the higher earner holds off for a larger monthly payout.
There’s also “no advantage” to delaying beyond your full retirement age (FRA) if you claim spousal benefits, Gates added.
“The spousal benefit maxes out at 50% of your spouse’s full retirement benefit and does not increase after FRA,” she said. “If your spouse has already claimed their benefit, delaying yours won’t grow the amount.
“However, if you qualify for your own benefit, you might consider claiming the spousal benefit first and switching to your own benefit later, if it’s higher.”
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