Social Security: The Obvious Reason You Shouldn't Wait Until 70 Before Applying for Benefits

To most people, it seems obvious that it's smart to wait as long as possible before applying for Social Security. But is this really the best thing to do? The answer is often no.

Central to this conclusion is the fact that the age at which you begin receiving benefits impacts the size of your monthly checks.

If you receive them at the earliest possible time -- the month after your 62nd birthday -- then your monthly benefits will be 25% lower than they would have been had you waited until full retirement at 66.

On the flip side, if you wait until turning 70, your benefits will be 32% greater than if you had started taking them at 66, or full retirement, and 76% larger had you elected early retirement at 62.

As Motley Fool contributor John Maxfield discusses in the video below, however, these comparisons ignore probably the most important variable: the lifespan of the average American. Once you factor this in, it becomes obvious that only a minority of people should wait until 70 to apply for benefits.

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  • Report this Comment On May 23, 2014, at 5:21 PM, monkeyfurball wrote:

    Yep, the unfortunate truth.

  • Report this Comment On May 23, 2014, at 5:22 PM, bill4mg wrote:

    Actually the life expectancy for someone age 62 in the USA Is: 82 for men and 85 for women.

  • Report this Comment On May 23, 2014, at 5:23 PM, bill4mg wrote:

    I meant to add that he made the common mistake of using the life expectancy from birth. Someone 62 has already made it through 62 years without dying, so their life expectancy is longer than from birth.

  • Report this Comment On May 23, 2014, at 5:59 PM, VictorPsycho wrote:

    I don’t know Bill, the CDC is on the writer’s side.

    Personally I’ll be reassessing my health at 62 and make the call from there.

  • Report this Comment On May 23, 2014, at 6:15 PM, avator2187 wrote:

    I signed up at 62 and my income is over twice of what you are stating on your chart

  • Report this Comment On May 23, 2014, at 6:26 PM, segarolow4 wrote:

    Three things.

    1. Get it as soon as you can.. Down size and get the hell out of Dodge. And fast.

    2. & 3. See on 1.

    I did it and glad I did..

    Don't count on SSA being there in 8-10 years. Not the way the Idiot Government is going.

  • Report this Comment On May 23, 2014, at 6:33 PM, earth2sterling wrote:

    There is another thing to consider beside lifespans, and that is the move to deny benefits to "The Rich" in an effort to improve the bottom line. People have come to think of Social Security Insurance as a tax. But the fact is that we have already paid taxes on our "contributions" so it is an insurance plan, not a tax and thus should not be means tested.

  • Report this Comment On May 23, 2014, at 6:48 PM, albany wrote:

    Data is ongoing and changing ALL the time. The biggest growing group is the CENTURIONS! People reaching 100 years old. If this is the new model you would be a fool to not wait until 70 to get the maximum benefit........

  • Report this Comment On May 23, 2014, at 7:03 PM, d014333 wrote:

    The bottom line is whether or not you need the money. I'm 64, in good health, working from home, and will be till I'm 70. It makes no sense for me to take the money now as I'll just be paying out 40% in combined fed and state taxes. It makes more sense to start taking ssi when I retire at 70. My tax rate will be less than half what it is now, and the monthly amount will be 50% more. I have a healthy spouse, and if I die at 71, she will have a higher monthly income till she dies. On the flip side, if you're single and in poor health, take ssi early.

  • Report this Comment On May 23, 2014, at 7:08 PM, yesihunt2 wrote:

    I for one am taking it out at 62.....that would be 8 years, 10 months and 14 days.....yes I'm counting. I have worked as a nurse for over 30 years, my joints are pretty damaged not to mention my nerves.....taking it early? You bet I am.....

  • Report this Comment On May 23, 2014, at 7:16 PM, BeeInKc wrote:

    I casually browse the obituaries. An average of 77-78 years does not tell the whole story. A couple people pass pretty young <50. Quite a few die 55-70. Then there is another group in the high 80's and up. It averages out to 77, but most people don't get that many years. The averages seem skewed by people who live a very long time.

  • Report this Comment On May 23, 2014, at 7:21 PM, apeyron wrote:

    WRT life expectancy of 77, is that someone born this year or someone that is currently 62? Doesn't life expectancy change as one gets older?

  • Report this Comment On May 23, 2014, at 7:29 PM, jhnmdahl wrote:

    A couple key omissions in what is presented here.

    First, someone who is already 62 has a longer life expectancy than an average person, as they have already made it to 62 without dying. This skews preference toward deferring benefits for most everyone of average or better health.

    Second, many if not most people who elect to defer are using the 30+% greater payments as a sort of long life insurance, and are happy to trade an additional 30+% for the rest of their lives for a 50/50 at worst chance that they may die early and fail to maximize lifetime income.

  • Report this Comment On May 23, 2014, at 7:40 PM, luchetti1225 wrote:

    have husband 10 years younger, I am waiting until 70 not taking now at 62, I cannot collect on his until he is of full age I could be dead by then and his birthday being 10 years younger could be raised I need to wait until 70 have been laid off since 50

  • Report this Comment On May 23, 2014, at 7:45 PM, tonyatn wrote:

    I've seen a lot of sick and old looking people at 65 and 70 yrs old. Don't wait until you are sick and old!

  • Report this Comment On May 23, 2014, at 7:46 PM, moobearus wrote:

    I disagree with John and I will explain why most people should wait until age 70 to take social security.

    First, yes, if you have serious reason to believe you will not live to age 82 you should take it early (poor genes, grossly overweight, diabetes, heart disease (combinations of them)).

    But, consider this, a man 60 right now has an expected life span of 82, a woman 60 right now has an expected life span of over 84. Here is where it gets interesting - with each year the expected life span gets higher. Remember, you have the entire health industry having a vested interest in everyone living longer.

    You can check the numbers for yourself here:

    Remember - all the pension, social security, and medicare are in deep financial trouble because they based their numbers on bad (much lower than actual) expected life span estimates.

    An article like this feeds into confirming most people's desire to get whatever they can as soon as they can - unfortunately, although he made us feel good in the article, John's conclusion is wrong.

    Let me assure you, for most people, they should wait until age 70.

    The reality is that we need to raise the social security age substantially - it was never designed for paying out to people for 10+ years, let alone the 20, 30, and 40 years it now is.

  • Report this Comment On May 23, 2014, at 7:55 PM, SnuffyG wrote:

    Note that whatever your age is now, and whatever your Average Life Expectancy is......that there is a 50% chance that you will not live to the ALE.

  • Report this Comment On May 23, 2014, at 8:27 PM, Evelyn wrote:

    Take the money whenever you want. I ran spreadsheets again, just now - if I take the money at 62 which both of us did), versus 66, I am dead even at 77. If I compare 66 to 70 - dead even at 82. That is putting the money under a mattress. If I add 3 percent interest - taking it at 62 versus 66 are dead even at 81. 66 versus 70 are dead even at 85. If you look at age 90 for both charts, it is a matter about 11 percent difference total - by age 90 !!! Big deal!!! Notice how often I use the word DEAD. I would rather have the money when I can use and enjoy it, than wait until I am in The Drooling Academy - or well - DEAD. We are now 64 - might not make 90 - or the other break-even numbers. So I am betting on US - having the money NOW! Yes, we have pensions and excellent health insurance - I know not all are so lucky.

  • Report this Comment On May 23, 2014, at 8:31 PM, roger142 wrote:

    If some one is still working at 62 and is making enough money they would have to pay some of the SS back, then I would say wait.

    Butttttt if someone who can afford to wait to draw their SS, especially if they are still working, but making less than I think its 24K, if they were to go ahead and sign up for it, then they could invest it basic low cost index funds. This would be even better if the person is still working and puts this money in a Roth account.

    I believe in as few as 5 years the amount of growth in the mutual funds would put them way ahead of just waiting to draw SS so the get more. Plus if they die, this would be a nice inheritance for their ungrateful children.

  • Report this Comment On May 23, 2014, at 8:59 PM, nittanyfan wrote:

    wrong wrong wrong - if you need the money to live on then take it. But if you don't need to take SS early , don't take it. If you happen to live a long life into your 80's & 90's you will greatly appreciate the higher monthly payment. If you die earlier , IT WON'T MATTER TO YOU WHEN YOU ARE ON THE OTHER SIDE!!

  • Report this Comment On May 23, 2014, at 9:05 PM, moobearus wrote:

    Nittyfan - beautifully said!!

  • Report this Comment On May 23, 2014, at 9:52 PM, FactChecker2 wrote:

    He makes a simple error that an actuary would never make: "The average life expectancy is 77". That is the life expectancy at birth. But you make this decision when you have already lived to 62. At age 62 a male can expect to live to 82 and a female can expect to live to 84. That makes all the difference. Actuarial tables of remaining life expectancy are easy to find with Google.

  • Report this Comment On May 23, 2014, at 10:13 PM, colonelburton wrote:

    Here's my take. If you need the $$ at 62, take it. If you don't need the $$ at 62, take it anyway and invest it. Either way, you have it and can do with it what you want.

  • Report this Comment On May 23, 2014, at 10:30 PM, kcmojo wrote:

    I'm 64. Have my own company. Can pay myself Zero or 150k until I turn 70. Will the additional wages help my benefits when I turn 70 or are your benefits calculated at 62 and that's what they use from then on?

  • Report this Comment On May 23, 2014, at 10:31 PM, lionfour wrote:

    If you wait until 67 to start receiving benefits instead of 62 it takes TEN YEARS to reach the break even point. DUH I'll take 75% ASAP IF YOU PLEASE.

  • Report this Comment On May 23, 2014, at 11:11 PM, trifectasss wrote:

    Here's what's not mentioned. Starting at age 62 he's saying 9000.00 a year. Starting at age 66 he's saying 12,000 a year. So you can get 36,000 starting at 62 that you wouldn't get waiting to 66. At the added 3000.00 a year, it would take 12 years(or to age 78) to get the 36,000.00 back that you deferred. So, take that 36,000 that you received from age 62 to 66 and invest it and you can probably be at least even by age 80 or greater. Now you're gambling that you live even longer.

  • Report this Comment On May 23, 2014, at 11:19 PM, easygoingone wrote:

    My Dad retired at 65 and between then and 70 he got Alzhiemers. So basically he got cheated out of his retirement. He lived to 80 but that was in a ward for people whi can't remember today. It made me mad because he got cheated out of his years of relaxation. He worked hard all his life and then only got a few years of enjoyment. Since it is my genes I could wind up the like him and my joints and back kill me but I still work at 63. I guess it depends on how my body holds up. But thinking of retiring and work part time.

  • Report this Comment On May 23, 2014, at 11:27 PM, donaldrocker wrote:

    Very helpful information from everybody. But still can't find an answer to my question--can I start getting SSecurity checks if I'm still working full-time? A lot of people at work said I can't, but I can't seem to find any reliable data that says that I can or cannot. Thanks!

  • Report this Comment On May 23, 2014, at 11:55 PM, scgsenior wrote:

    One major reason to take benefits when you first reach full retirement age is the "Time Value of money".

    A dollar today is worth more than a dollar next year.

    In my case the money received from age 65 1/2 until age 70 would equal to the higher benefits and not be depleted until age 78. By age 78 inflation would most likely mean that I was would not ahead at all.

  • Report this Comment On May 24, 2014, at 1:11 AM, shragissk wrote:

    Obviously there are personal factors to consider, But it is great to read one article giving the reasons to retire at 62, when 99% of articules say its a no brainer, wait till 66 or 70. It is not a no brainer and for many people 62 is the right time to collect. Most people want to/have to retire at/near 62 and the risk of a benifits break even point at age 77(my personal age that the total pay-outs would be greater starting at 67 reather than 62) is a poor reason to delay living the dream of not schepping to the office each day.

    MOST people should retire at 62, if they can afford it.

  • Report this Comment On May 24, 2014, at 1:17 AM, Dblj01 wrote:

    I'm not sure your figures are a hundred percent correct or if, maybe it's a case by case thing, but, my wife broke her back just after returning to work after taking a long time off to raise our children. After that, she could only do menial jobs that paid next to nothing. Because of this, the quarters she worked didn't give her enough to qualify as credits toward getting disability. So, about four months after her 62nd birthday, she was forced to apply for her regular retirement. This reduced her monthly from just under $1300 (had she waited) to about $730 a month. It's quite a difference, and, although it helps, it could have been a lot more, especially with me being out following shoulder surgery for nearly two years.

  • Report this Comment On May 24, 2014, at 1:19 AM, gb98 wrote:

    Here are a couple of points to add to the discussion.

    First, answers to almost all of the questions asked can be found at (Yes, there is a penalty for excess income if you collect between ages 62 and 66. It goes away at age 66.)

    Second, Social Security provides an increase of 8% a year between age 66 and age 70. In addition social security is one of the few programs that includes a cost of living adjustment making waiting an even stronger play if you can afford to wait. Get real, in today's environment, a guaranteed 8+% is a very solid return.

    Third, nothing is ever as simple as it seems, including Social Security. There are a variety of options including filing and suspending, then taking benefits based on your spouse's Social Security benefit if they are receiving one, providing you are age 66 or over. The spouses benefit is based on 50% of what they would have received at full retirement (age 66) even if they retired at 62. Of course that amount varies based on your spouse's earnings history. In my case, I ran the numbers and with spousal benefits added in, my break even occurs at 76 and 4 months.

    The short story is, "Do your homework." There are lots of factors, and if in doubt, talk to a pro. You can even talk to people at Social Security who will tell you the numbers but won't tell you what to do.

  • Report this Comment On May 24, 2014, at 1:27 AM, SmokinAces69 wrote:

    Say the average person would get $1,000.00 at 62 years old, but decided to wait until 66 to start collecting the max of $1,500.00. From 62 to 66 you didn't get the $1,000.00 a month. So basically you left $48,000.00 on the table...It would take you 8 years or age 74 too recoup that 48K.

  • Report this Comment On May 24, 2014, at 1:41 AM, sactowntruth wrote:

    Everyone's situation is different.

    One writer makes a point that is true, basically, if you make it that far, your life expectancy is more than just the "average". After all, you have not died in the last 62 years and those that have are included in the average.

    For me, IF I continue to work, it means 700 dollars a month more at 67. But then again, I have lost out of 90,000 dollars while waiting. It will take me well over 10 years to make that up.

    But in the end, it matter for ME not a bit. Like I said we are all different. I will not work until 67 or delay getting S.S.

    I would rather retire early, leave California to save in taxes (I could buy a nice little house in many states for half the equity I have in my house today) and use my high California wages to my advantage in another state or even another country.

    Just remember the numbers you see on your S.S. account assumes you will work until the retirement age shown,

    But since it is a welfare system, those numbers can change anytime. There is no promise you will get anything.

  • Report this Comment On May 24, 2014, at 1:45 AM, JJreal wrote:

    I can make it! Till 70 that is! I never used drugs EVER! I never abused my body. I drink moderately. I've been born with good genes. No cancer in the family (except the ones that used tobacco products. All the cool uncles & only two aunts that indulged in smoking, my cousins & Grand parent all died because of the Cancer trigger: TOBACCO. Funny, I remember my favorite uncle who chewed in the end was carved up like a turkey by doctors who tried to get rid of the Cancer to save his life he thought Tobacco chew was better than cigs. how wrong he was. I miss him. If your lifestyle indulges in harmful vices perhaps you should collect as soon as age permits. Survival of the fittest, HARSH but true!

  • Report this Comment On May 24, 2014, at 2:59 AM, arkbiz wrote:

    Not taking SS prior to age 70 will have absolutely no effect on our standard of living. In a real sense it is "extra" money that we'll likely never spend.

    Because its functionality to us is to provide a defense against running out of money in our later years, it makes sense for us to wait for the maximum check size.

  • Report this Comment On May 24, 2014, at 3:29 AM, bang4dabuck wrote:

    If you do the math, using their numbers, 4 years at $750 a month or $9,000 a year. That would be a $36,000 headstart. It would take $36,000/($1,000-750) to catch up i.e. 144 months or 12 years. Should at least a few more months to take into account that $36K then is worth more now.

    Do the same exercise for 66 vs 70 i.e.( $1k x 48 mo.) / $320 = 150 months or 12.5 years before compounding.

    That being said here is an unusual case when you should wait as long as you can. My friends' spouse is substantially younger than him plus they have 2 young kids. He will try to wait as long as he can so they can derive the benefits well after he is gone.

  • Report this Comment On May 24, 2014, at 7:11 AM, JACKT wrote:

    A high majority of people are not traveling the world at 80, down to one car per family and the car lasts forever. Looking at my parents and there friends that have lived that long, get your money as young as you can afford it, you do much less the older you get 90% of the time. Both of you living to a healthy older age and enjoying the money are not great. Enjoy it as early as you can, you may have the money but not be able to enjoy it later.

  • Report this Comment On May 24, 2014, at 7:49 AM, mickeysmom34472 wrote:

    @Donaldrocker. I took my SS at 64, am still working fulltime now at 66. I work in retail, low paying job which allowed me to take it at 64. I couldn't make more than 14.5k a year so I had to watch my hours so I wouldn't have to pay back. I also have taxes taken out of my SS. If my husband and I made more money together I may have waited till 66 but I am glad that I took it when I did as life has been a lot easier financially for us.Now that I am 66 I can make as much as I want but I still have taxex taken out monthly and come income tax time I still get a refund so in answer to your question, yes you can work full time and collect but take into consideration the amount of money you make a year

  • Report this Comment On May 24, 2014, at 8:32 AM, JimmyJamesJim wrote:

    He is using life expectancy at birth. He should be using life expectancy at age 62. In my opinion, Motley Fool should delete this article. There is no shortage of simplistic articles being written on this subject. The truth is that there are so many factors to consider, such as taxes, survivors, current income, etc. and the rules are so complicated, file and suspend for instance, that without expert advise tailored to your unique situation, you can't hope to make the best decision.

  • Report this Comment On May 24, 2014, at 8:52 AM, Hulgar1 wrote:

    Lots of good comments. I'd note a couple of things.

    First, the advantages of having money earlier when you are still physically able to be able to travel and enjoy it are often overlooked. If you won't need that extra SS to survive in your 80s then a strong argument can be made to take it earlier.

    Second, everyone's calculations are based on today's assumptions and SS rules/tax laws. My biggest concern is that the govt. will change the rules and either means test out the ones that have diligently saved and prepared for retirement, or change tax laws with the same result of giving the savers less net SS in their pockets.

    So, part of the equation becomes do you trust the govt. to not change the rules if you wait. For me age 70 is 14 years away. I'd always planned to wait until 70, but increasingly I am losing confidence the govt. will keep the rules the same. To each their own.

  • Report this Comment On May 24, 2014, at 9:04 AM, DarylZiel wrote:

    One item most people are not aware of is that everyone that used to be on Welfare has now moved to SS/Disability after Clinton forced them to actually work to receive Welfare help. There are daughters of dead fathers receiving SS benefits through loop holes and anyone not interested in working for a living can receive disability benefits if they claim they are mentally disabled. Most of the ghettos are filled with SS/Disability benefit recipients waiting for their checks on the 1st and 15th even though they don't work, don't go to school and don't deserve the benefits. This is a broken system that is being slowly killed by people that NEVER put a penny into it. They will keep killing it until the true beneficiaries of this system stand up and make our Government throw them out so that it will still exist when our time comes. Democrats looking to buy more votes will let hem stay there regardless of the destruction they cause. Think about this very carefully if you think the Government cares if you will receive any SS benefits when you time comes. They only care about the votes they will get in the next election.

  • Report this Comment On May 24, 2014, at 10:03 AM, lm1b2 wrote:

    Its like i have been saying all along,if you know how long you are going to live wait till your 70,or not LOL!

  • Report this Comment On May 24, 2014, at 12:45 PM, Rich3067 wrote:

    Daryl you are correct that welfare just got shifted to SS. You are wrong that liberals and democrats support or defend the broken system. Instead of the us vs. them mentality there is common ground on the frustration with the system. A few days ago I spoke with a woman who has been taking SS disability for decades and looks like will continue for decades to come. She looked healthy to me. I went to the SS office to correct an error in my file so I can start to receive my earned benefits at 62 in a few weeks. What I saw was an eye opener. The place had an armed guard. The office was not opened to the customers, instead there are windows surrounding the office area. There was Plexiglas between me and the SS employee. Most of the people waiting looked a lot younger than me. In just a few seconds after walking into the place I could see the system is broken.

  • Report this Comment On May 24, 2014, at 1:18 PM, livingbear wrote:

    does anyone know if you can take a lump sum at once. get all the money at one time JJ

  • Report this Comment On May 24, 2014, at 1:23 PM, AB42 wrote:

    Everyone seems to forget the income one receives if SS is taken early. Or, as I did, take it at my normal time and continue working several years. My wife started at 62. We figured the increased benefits she would receive if she waited the additional years to her time to receive full benefits against the income she would receive at the lower amounts. It would take 14 or so years to make it up. It made sense to take it early

  • Report this Comment On May 25, 2014, at 7:28 AM, greyhound44 wrote:

    I rather think this FOOL is an IDIOT and has NO Clue!

    I retired 31 Aug 2003 at age 58.75.

    How old is he???

    I paid Max SS portion of FICA for 35+ years which allowed me to collect MAX SS retirement benefits (reduced for age) at 62 - never paid a dime in income tax on same.

    That said, I have not paid FICA since; only US$199. in property taxes in the US since 2004, and NO income taxes since 2007 ($1820 that year)

    That will change next year when I have to begin taking MRDs from my US$2MM IRAs, but I deferred lots away from the useless US over the years and shall continue doing same.

    Sure glad I no longer pay for Welfare; Snaps; medicaid for the blacks; illegal aliens; Muslims, and white trash!!!!!

  • Report this Comment On May 25, 2014, at 8:09 AM, Mathman6577 wrote:

    Good thought provoking article. This subject should always be part of a "behavioral economics" discussion. I don't think there is a right/wrong answer when trying to decide when to take SS. For most baby boomers the cutoff point is an age in the late 70's. If you think you can have a good quality of life for more than 5 to 10 years past that point, then it probably pays to wait. If you think your best years are before the cutoff point, I would recommend taking it early. If you really pay attention to the discussion most of the people that tell you to wait are financial planners. They have a vested interest in investing of your non-SS money so be careful about only listening to them. I would also listen carefully to "retirement" experts (like Wade Pfau).

  • Report this Comment On May 25, 2014, at 5:52 PM, asICit wrote:

    Compared to taking the monthly benefit of $750 at age 62 with taking the monthly benefit of $1320 at age 70, a person would have to live to the age of 80.526316 years at the higher benefit amount just to catch up and break even with the lower benefit they could receive if they started eight years earlier at age of 62. In other words, (10.526316 yrs. x $1320/mo. x 12 mos.= $166,736.845) vs. (18.526316 yrs. x $750/mo. x 12 mos.= $166,736.844).

  • Report this Comment On June 02, 2014, at 6:46 AM, mjpersely wrote:

    Can we also factor in that in 2035 supposedly there will be reduced benefits due to the state of the system of SS such that it would not be the full benefit amount even if at retirement age? I'd like to see what the numbers would be with that in consideration.

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