5 Reasons You Should Wait To Claim Social Security Until Age 70

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Social Security, in its basic form, is a relatively simple program. Over the course of your working career, your payroll taxes will help fund the benefits of current retirees, and once you retire, the same will be done for you.

The specifics of claiming Social Security, however, can get a bit tricky. While “full retirement age” for most Americans is now 67, you can file for benefits as early as age 62. On the other hand, you can also wait to claim Social Security until as late as age 70. Obviously, the earlier you claim benefits, the lower your payout will be. But what are the other reasons you might want to wait until age 70 to file? Read on to find out.

Your Benefit Could Be Significantly Larger

The primary and most obvious reason you might want to wait to file for Social Security until age 70 is that your benefit could be much larger. But how much larger?

After you reach full retirement age at 67, each year you wait to file, your benefit will jump by 8%. So, if your monthly benefit at age 67 is $1,000, it would jump to $1,080 at age 68, $1,160 at age 69 or $1,240 at age 70. That’s a 24% jump in your benefits just by waiting three years. Compared to filing at age 62, your benefit at age 70 might increase by 77% or more.

Are You Retirement Ready?

You Have Other Assets

If you’ve built up a substantial retirement nest egg, waiting until age 70 to claim Social Security could be a good call. If you have enough income to live off in the short-term, there’s no need to draw your Social Security early because it will cost you.

Remember, your benefits will jump by 8% per year from ages 67 to 70. That’s essentially an 8% risk-free boost to your income, something you simply can’t get in any investment market. In that sense, you can think of waiting to file for benefits as if you were simply keeping that money in an investment account — one that’s going to grow 8% per year with no risk — while you live off your other assets. For those that can afford to wait, that’s a great investment.

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You Anticipate Living a Long Life

Longevity is an important factor when devising your Social Security strategy. If you’re in good health and your family has a history of longevity, waiting could be the optimal strategy for you.

For example, if you wait to file until age 70 but only live to age 71, you would have been better off claiming your benefits early. However, if you will live to age 100, waiting until age 70 to file will permanently boost your benefits by a significant amount, and you’ll enjoy those enhanced payouts for 30 long years.

Are You Retirement Ready?

Your Spouse Is Already Drawing Social Security

If you and your spouse are both eligible for Social Security, you have some options when it comes to your claiming strategy. Many couples have one spouse file for Social Security early, so the household is drawing income, while waiting for the other spouse to reach age 70.

At that point, the second spouse files and starts drawing the enhanced benefit. This may not be an option if you don’t have supplemental retirement assets and your spouse’s benefit is small, but in many cases, it’s an optimal strategy.

You’re Still Working

If you earn over a certain amount of money every year, as much as 85% of your Social Security benefits will become taxable. But if you know for sure that you’ll be done working by age 70 — or at least earning less than the annual limit — then waiting to file can make a lot of sense.

Not only will your benefit be enhanced, but you’ll receive the entire amount, rather than handing back some of it to the government in the form of taxes.

Are You Retirement Ready?

Bottom Line

Yes, the longer you wait to claim Social Security, the larger your monthly check will be. But there’s a cost to waiting as well.

From age 62 to age 70, for example, your benefit might increase by 75% or more, but you’ll also be foregoing 96 months of paychecks along the way. That’s a lot of income you’re trading for higher benefits at age 70.

Since no one knows exactly how long they will live, you’ll be taking a gamble by waiting to file. This is why it’s important to develop a Social Security claiming strategy in consultation with a financial advisor who is an expert in the field.

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Are You Retirement Ready?

About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.
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