U.S. workers can start claiming Social Security benefits at age 62, but there’s a decent argument to be made that waiting to age 70, the last year one can collect Social Security, is a wise decision.
That’s just for starters. There are a variety of decisions to be made before collecting Social Security payments at age 70, but in general, if you expect to have good health and have other reliable income sources in your 60s, waiting to collect can be a good idea.
You’re getting the most cash by waiting
The strongest argument for waiting until age 70 is simple: you’re locking in the highest guaranteed monthly benefit possible. “For healthy workers with a longer life expectancy, that larger inflation-adjusted check can provide meaningful financial security later in retirement, especially when healthcare costs tend to rise,” Jackson Ruggiero, co-founder at DisabilityGuidance.org, told NTD News.More years to work if you want, and more cash to earn
You can also make more cash in the workforce that adds to your Social Security cash haul.“For most people, delaying benefits until that point can create greater long-term financial stability and potentially higher lifetime income,” Adam Olsen, a financial planner at Mutual of Omaha, told NTD. “It can also be a really smart option for people who are still wanting to work and earn a full-time paycheck. One reason for that is if you claim Social Security before full retirement age or before age 70 while still working, there are earnings limits that can temporarily reduce your benefits.”
Bigger payouts for a spouse
Another big (and often overlooked) benefit of waiting to claim Social Security until age 70 is the impact on a surviving spouse. “If the higher-earning spouse delays benefits until full retirement age or even age 70, and they pass away first, the surviving spouse may be able to step into that larger benefit amount,” Olsen said. “That can create significantly more financial stability later in retirement, especially for widows or widowers living on a single income.”The ‘reliability’ formula works in your favor
Another upside is predictability, as Social Security benefits are calculated using a worker’s highest-earning years and the age at which they begin claiming benefits.Risks Are In Play By Waiting, Too
Perhaps the biggest risk of delaying benefits until full retirement age is the possibility that the retiree may pass away before receiving meaningful payments.“In most cases, people contribute to Social Security throughout their working lives with the expectation of collecting benefits during retirement,” Rick Reed, a 401(k) analyst and practice leader at Segal, a human resources services firm, told NTD. “So the timing of when to begin SS payments is an important consideration.”
Delaying Social Security payments can also create risk 70 if you don’t have a solid income and investment bridge strategy in place. “Waiting on Social Security can work very well, but only if you can comfortably cover expenses in the years leading up to it without draining retirement accounts too aggressively or taking on debt,” Ruggiero added.