The Best Reason to Take Social Security Long Before 70

By the time you sign up for Social Security, you've spent decades paying into the program. It's only natural that you'd want to get the most out of it. You may have heard that delaying benefits until 70 is the best way to do that because you'll get larger checks. There is some truth in that, but it's not the wisest option for everyone.

Here's a closer look at how your age affects your benefits and when you might be better off signing up much earlier.

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Why delay until 70?

You become eligible for Social Security at 62, so the idea of putting off your benefits might seem strange to some. Why would you want to miss out on years of guaranteed income? The answer has to do with how your benefits are calculated.

The Social Security Administration assigns everyone a full retirement age (FRA) based on their birth year. For today's workers, it's between 66 and 67. You have to wait until then to sign up for benefits if you want the standard amount you've earned based on your work history.

Signing up early is an option, but doing so shrinks your benefits. Those with an FRA of 67 who sign up at 62 only get 70% of their standard benefit per check, while those with an FRA of 66 only get 75% per check for signing up right away. 

On the other hand, those who delay benefits see their checks grow a little bit every month until they reach 70. Then, they qualify for their maximum benefit. That's 124% of your standard benefit per check if your FRA is 67 or 132% per check if your FRA is 66.

To put this in perspective, let's say you qualify for the average benefit of $1,563 per month at your FRA of 67. If you sign up at 62, you'd only get $1,094 per month, but if you waited until 70 to sign up, you'd get $1,938 per month.

Why wouldn't you want to delay until 70?

Now that you understand the benefit of delaying, it can seem like the obvious choice. You're sacrificing a few years of benefits at first for much larger benefits going forward. For most seniors who live into their 80s or beyond, delaying benefits is often the more lucrative option. In some cases, it helps them get $50,000 or more out of the program compared to signing up right away.

But there's a big if there. Those who don't make it into their 80s are usually better off signing up for Social Security much sooner. 

To prove this, here's a table showing how much you'd get from Social Security at various starting ages if you qualified for the average $1,563 benefit at your FRA of 67. That means you'd get a benefit of $1,094 per month by starting at 62 and a benefit of $1,938 by delaying until 70. The figures below show how much you'd have received from the program overall by the end of each year.

Source: Calculations by author.

As the table above illustrates, claiming at 62 will give you the largest benefit if you believe you'll die before 78. But beyond that point, delaying benefits leads to more money overall. For those planning to delay until 70, you'd have to be pretty confident that you'd live until at least 82 for this to be worthwhile.

The problem is you can never be sure how long you'll live. So you just have to take your best guess. Some people prefer to hedge their bets by signing up somewhere in the middle, like their FRA. This is another option if you want to enjoy some of the benefits of delaying without waiting until you're 70.

It's best to come up with some sort of plan for when you're going to claim Social Security, even if you're decades away from doing so. Create a my Social Security account to get a personalized estimate of how much you can expect from the program. Then, make a table like the one above to figure out which starting age will give you the most money.

Knowing how much you can expect from the program will help you figure out how much you need to save on your own for retirement. Your plans for retirement or Social Security might change over time, but you can make alterations over time to help keep yourself on track. That way, when it comes time to retire, you won't run into any unpleasant surprises.