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Social Security: This Simple Chart Shows How to Almost Double Your Benefits

If you're approaching retirement age and want to get the most out of Social Security, there's one thing you need to know: The longer you wait to receive benefits, the bigger they will be.

How much bigger? To illustrate this, I drew up the following chart, which compares the difference between applying for benefits at three different ages.

  • The first is at age 62, when you're first eligible to apply.
  • The second is at 66, when you reach "full retirement age" and are thus eligible to receive your entire "primary insurance amount."
  • And the third is at 70, which includes "delayed retirement credits" and thereby boosts your monthly check.

The difference between these points is dramatic. Assuming you were born between 1943 and 1954, your reward for waiting until age 66, as opposed to starting benefits at 62, is a 33% increase. And if you wait until turning 70, the payment goes up by 76%, or nearly double the original amount.

The reason is twofold. In the first case, retirees are effectively punished for receiving benefits early. The Social Security Administration does so by docking your primary insurance amount (what you're entitled to at 66) by five-ninths of 1% for every month you take benefits early up to 36 months and then five-twelfths of 1% for every month thereafter (currently up to 12 months -- though this begins to increase for people born after 1954).

Alternatively, in the second case, retirees are rewarded for waiting to receive benefits until after their full retirement age. If you choose this route, your monthly check increases by 8% for each full year that you defer, up to age 70. By waiting until then, in other words, your monthly Social Security check would increase by an impressive 32%.

So, is it worth it to wait? It depends. If you can financially afford to wait and are likely to live past age 77, then it would be in your interest to do so. Moreover, if you plan on living past 82, then it'd also be worth it to wait until turning 70, at which point your benefits are maximized. By contrast, if you can't afford to wait or aren't as optimistic about your longevity, then taking benefits early will almost certainly be a better option in your particular case.

This is a morbid and unfortunate subject, to be sure. And it's one that few people want to consider. But it's nevertheless critical that you do so. Remember, you've paid into the system for dozens of years. As a result, there's absolutely nothing wrong with wanting to maximize what you take out of it in return.

How to get even more income during retirement
Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.


Read/Post Comments (31) | Recommend This Article (30)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 17, 2014, at 8:22 AM, sporked wrote:

    Great info. Now I need a guarantee that I will live long enough to collect the same amount of money I would have collected retiring at 62.

  • Report this Comment On May 17, 2014, at 8:30 AM, Tillerman1976 wrote:

    One other possibility that wasn't considered is to take your payments at 62. But take all your payments until age 70 and place them into a personal investment account. IF (and this is what makes this a risk), you can get 10% annual return on the investments in that 8 year period, you should have 111,299 in the account. A 570/month withdrawal from this account each month to supplement the 750 monthly SS payment (=1320/month), allows you to go to age 86. It could go farther depending on additional interest growth and tax requirements after reaching age 70. Even a modest 6% interest rate can extend the breakeven point by a few more years.

  • Report this Comment On May 17, 2014, at 8:32 AM, Tillerman1976 wrote:

    I guess my feeling is I trust my ability to invest and save my money, better than I trust my governments.

  • Report this Comment On May 17, 2014, at 8:39 AM, sporked wrote:

    This is priceless ...Pick your Demise Date!

    So, is it worth it to wait? It depends. If you can financially afford to wait and are likely to live past age 77, then it would be in your interest to do so. Moreover, if you plan on living past 82, then it'd also be worth it to wait until turning 70,

    Do you plan of living past 82??? If asked 99.99% plan of living past 82. How many do? Feel Lucky?

  • Report this Comment On May 17, 2014, at 8:44 AM, smithrl5 wrote:

    Where is the chart that shows how much you would have at 70 if you started collecting at 62 and put that 750 per month in the market?

  • Report this Comment On May 17, 2014, at 8:50 AM, rocsoe wrote:

    Decent article because it details the breakeven thresholds.

  • Report this Comment On May 17, 2014, at 8:50 AM, DuckDogJim wrote:

    I might be foolish....but I think Maxfield's Social Security analysis ignores an important factor: ROI. Ya see, the way I look at it, if I take SS early, I don't draw down savings to support my life style....it stays invested. If that money has zero return, then the breakeven point (age 62 vs 66) is 77 years old.....I get that, and delaying SS is probably better. But if my return is 7% on the money that remains invested, the breakeven point is 92 years old.

    What makes my analysis so foolish? Why do all the analyses presented in the media (including Maxfield's) ignore the fungibility of money?

  • Report this Comment On May 17, 2014, at 9:06 AM, JACKT wrote:

    SS PAY YOU FAR LESS PERCENTAGE BACK THE MORE YOU MAKE, SO IF YOUR AT THE BOTTOM OF THE PAY SCALE YOU GET 100% BACK, IF YOU MIDDLE OR ABOVE YOU GET 16% OF WHAT YOU PAY BACK. AT 1400 A MONTH AT 62 PAYMENT IT WOULD TAKE ME UNTIL 81 TO BREAK EVEN FOR NOT COLLECTING AND BY NOT COLLECTING YOU CAN'T DO THINGS YOU COULD DO OR CAN'T PAY BILL. CRAZY TO WAIT,

  • Report this Comment On May 17, 2014, at 9:25 AM, Charos wrote:

    Well, my grandfather lived to be 99 and my father is 91. If I wait till I am 70 and I live to be 95 that's about 25 years at the max benefit. But, they will most likely change the rules by then and I will come out behind the eight ball.

  • Report this Comment On May 17, 2014, at 9:37 AM, NDimensionalDino wrote:

    Nobody in my family - on either side - has EVER lived to see their 70th birthday. Once again, this author seems to think like all the other authors, that we all live to see 120. Maybe on the planet he's from, but not here on Earth.

    Everything this author says simply does not apply to me - or the 70% of the human population who dies before the age of 80.

  • Report this Comment On May 17, 2014, at 10:15 AM, gitter wrote:

    take it asap, i retired at the age of 45. and i get 1,800 per month. enjoy life at a very young age and into retirement

  • Report this Comment On May 17, 2014, at 10:37 AM, reymon1 wrote:

    Mr Maxfield, you sure take an awful lot of grief for trying to be helpful. Apologies for all of the "get off my porch" comments.

    Seems like the tax implications are among the variables that ought to be considered. Are the tax liabilities higher if you draw SS benefits at 62 (50% of your SS benefits are calculated into your AGI when you reach FRA)?

    My strategy is going to be to wait till I hit 70 to draw SS. This allows me to draw down my IRA and when I combine my IRA minimum distirbution with the 50% of my SS that has to be figured into my AGI number gives me a number I can live with tax wise.

  • Report this Comment On May 17, 2014, at 10:38 AM, Diamondick wrote:

    Dead at 65...

  • Report this Comment On May 17, 2014, at 10:51 AM, stevemaersch wrote:

    It is true that the person who waIts till 70 to collect Social Security will get 76% more at that time than the person who started collecting at 62. HOWEVER . . .

    1) 1 in 7 of us will die between ages 62 and 70.

    2) I collected more than $111,000 in Social Security between 62 and 70.

    3) Had I invested all my Social Security checks during that period in Vanguard's Wellesley Income fund I would have had $155,000.

    4) The person who waited till 70 to collect would have to make up for that $155,000 plus its future growth potential.

    5) Wait-till-70's break-even point (assuming 7% growth of that fund): age 92.

    So, if you plan to reach age 92, wait until 70 to collect. Otherwise you are a big loser.

  • Report this Comment On May 17, 2014, at 10:57 AM, asICit wrote:

    "A bird in the hand, is worth two in the bush!" If you think you're going to live forever, wait until you reach age 70 to collect Social Security and you'll get a higher monthly benefit. However, if you think your health, your occupation, an accident or some other factor might cause your early demise, why be greedy, take what you can now or when you reach 62 years of age. When you die, only your spouse or an ex-spouse (with a lower monthly benefit) or child under 18 years of age can collect your benefit. It's later than you think!

  • Report this Comment On May 17, 2014, at 11:43 AM, acesup wrote:

    I believe the reported increases in monthly social security pay outs assumes you keep working until you retire. If you stop working at 62 and don't claim until full retirement age or later you would benefit from the annual cola adjustment only. A far cry from the touted 8 percent a year.

  • Report this Comment On May 17, 2014, at 12:07 PM, Probeg75 wrote:

    As to those who think it's too risky to wait, I disagree.

    If I had taken my SS at 62 and live to 95 I would get approx. $460,000. I plan to wait until 70, based on the assumption ( you got to have some assumptions in life) I will live till 95 I will have collected around $795,000. As a Fool I look for the long term.

  • Report this Comment On May 17, 2014, at 1:05 PM, dlorenzen wrote:

    The charts at the beginning of the article makes it look like waiting to collect is a deal, but the reality is not so great. When you factor in a persons average life expectancy (I chose 88 years, 2% COL) against the total amount a person could collect over that time period, you will only receive 14% more money in total dollars if one waits to collect social security at age 70 v.s. 62, and only 5% more in total dollars if you wait until age 70 instead of collecting at age 66.

    14% seems substantial but in actual dollars it works out to approximately one extra payment. Big deal. I think I'll take the money up front and invest it somewhere else. Wish I could have done that all along instead of paying into social security all those years.

  • Report this Comment On May 17, 2014, at 1:37 PM, billinsd wrote:

    Im around $1400 a month when I turn 62.

    Not a huge sum,however at 62 Im young enough to enjoy the money and travel.

    At 70,Im sure i will not be as active,nor will I have a travel lust.

    At 80,the increased money would only go to the doctor.

    Im drawing at 62 and taking as many cruises as I can afford.

  • Report this Comment On May 17, 2014, at 2:06 PM, tkell31 wrote:

    I'm planning on living to 150, but what I plan and what happens seldom match up.

  • Report this Comment On May 17, 2014, at 3:22 PM, wagemanvivian443 wrote:

    iam on social security now and only getting 725.00 and you tell me how people can live on that for a month and yes im on other things and still cannot save money from month to month. when the state hicks up everything except your check.

  • Report this Comment On May 17, 2014, at 5:39 PM, crawlfish wrote:

    Here is a link to the Social Security actuarial Life Table

    http://www.ssa.gov/oact/STATS/table4c6.html

    About 16% of us men do not even get to 62 and even qualify for a benefit. By age 80 half of us are dead. Claiming decisions are a roll of the dice.

    And you have to consider both spouses if you are married. That can make claiming earlier or later better depending on individual situations.

    In my case because the wife is 4 years older and has not enough credits to get a benefit on her own, forfeiting both of our benefits till I was 66 years old (she cannot claim a spouse benefit until I claim) would take me to age 86 and her to age 90 to break even. The 50% survival rate for woman is 84 years old. And this is not considering the time value of money. As one poster said that pushes the break even point further out. As the Hunger games would say the odds are not in our flavor.

    But put the age difference the other way and it would be better for me to wait. Claiming at age 70 would take till age 80 to break even the median age span of men. But if the wife lived to her median age of 84 that would mean 8 years of the higher payment beyond the break even point. She could claim her spouse benefit at age 62 as I could file and suspend my benefit at age 66.

  • Report this Comment On May 17, 2014, at 5:49 PM, cvcrl1 wrote:

    Take it as early as you can, never know what the gov. will do to change the RULES, Get back some of the $$$$ you worked for!!!! ENJOY

  • Report this Comment On May 17, 2014, at 6:07 PM, rrtideman wrote:

    Well now I have been seeing a lot of articles like this one on several different sites for the past year or so.

    As everyone should be I am always skeptical until I see the numbers.

    So yesterday I sat down and wrote an Excel spreadsheet to determine how much I would draw depending on the year I started and how much total cash I would have drawn out of the system until the projected year I died. I ran the numbers for starting Social security for years 62 through 70 and dying from 62 through 95.

    In most cases I was better off If I started drawing at 62.

    Certainly if you wait until you are 70 too start and live to 95 you would have drawn more money out of the system but it isn't as much as you think, for my case the difference between starting at 62 or 70 and living to 95 in both cases was only about 20K.

    I encourage everyone to do the math for yourself.

    As for me, soon as I hit 62 I'm getting on the Social Security wagon.

  • Report this Comment On May 17, 2014, at 6:11 PM, dublinjones wrote:

    Another option, if both spouses worked, is to take SS at 66 and then suspend it until 70 to maximize the benefit. Once SS is claimed each spouse can claim the spousal benefit at 66. When 70 comes take the max benefit which is possible because you suspended at 66.

  • Report this Comment On May 17, 2014, at 8:34 PM, bkmobal wrote:

    I have always wondered if I should wait until I was 70 I know the Government would like for me to but then I took it at 62. Two things read Nestor vs Fleming Supreme court case I have already been hit once by it Windfall Elimination Provision and the following:

    "The fact Social Security is rapidly running out of money is well-known, it’s been known for years. By 2033 the existing bonds in the so-called trust fund will have been cashed in [where the government will get the money to do that is another interesting question] and used to pay benefits and the incoming taxes will be sufficient to pay 75% of the earned benefits. Twenty years is not a long time, many of the people collecting benefits today will still be collecting in 2033."

  • Report this Comment On May 17, 2014, at 8:37 PM, bkmobal wrote:

    I have always wondered if I should wait until I was 70 I know the Government would like for me to but then I took it at 62. Two things read Nestor vs Fleming Supreme court case I have already been hit once by it Windfall Elimination Provision and the following:

    "The fact Social Security is rapidly running out of money is well-known, it’s been known for years. By 2033 the existing bonds in the so-called trust fund will have been cashed in [where the government will get the money to do that is another interesting question] and used to pay benefits and the incoming taxes will be sufficient to pay 75% of the earned benefits. Twenty years is not a long time, many of the people collecting benefits today will still be collecting in 2033."

  • Report this Comment On May 17, 2014, at 9:45 PM, Elizbee wrote:

    I retired at 62 and I'm drawing per month what you show someone that retires at 66 will draw.

  • Report this Comment On May 17, 2014, at 10:17 PM, mpruet wrote:

    Several folks have suggested taking SS at 62 and then simply investing it. But for most folks, taking SS when it is not really needed to live on, would only increase their taxes. So it might make more sense to defer until 70 so as to avoid extra taxes. If you are 62 and retired and do not need the extra SS, then it might still make more sense to defer the SS and transition some of the pre-tax retirement into a Roth so it can grow for 10 years tax free.

  • Report this Comment On May 17, 2014, at 10:18 PM, mpruet wrote:

    Elizbee - that simply means that you had a higher than average salary during your working years.

  • Report this Comment On May 18, 2014, at 2:17 AM, Sambosky wrote:

    I took my money out at 64 and most of my family died at 67. I am almost 70 and received almost 120k already. I would never get that return by waiting until I was 70. You know Genes dictate a lot. Sam

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John Maxfield
JohnMaxfield37

John has written for The Motley Fool since 2011. He has a bachelor's degree in economics from Lewis and Clark College and a juris doctorate from Southern Methodist University. View John Maxfield's profile on LinkedIn

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