You can sign up for Social Security at any time after you turn 62, but a lot of people have their 70th birthdays circled on their calendar as the time they're going to claim. It might seem strange to wait that long, but there are some significant benefits to doing so. It's not right for everyone, though. Here's a look at the pros and cons of delaying your Social Security benefits until 70.
Two pros of delaying Social Security until 70
If you delay Social Security, you can look forward to these rewards:
1. You'll get your largest monthly checks
Every month you delay your Social Security benefits increases your checks, at least until you turn 70. That's when you qualify for your largest possible benefit. But how much you get depends on your income during your working years and your birth year.
The government assigns everyone a full retirement age (FRA) based on when they were born. Most workers today have a FRA between 66 and 67. You must wait until this age to claim the full benefit you're entitled to based on your work history. Claiming earlier shrinks your checks while delaying increases them.
Those with an FRA of 67 get 124% of their full benefit per check by delaying until 70, while those with an FRA of 66 get 132% of their full benefit per check. To put that in perspective, if you qualify for the average $1,665 benefit at your FRA, you could get anywhere from $2,065 to $2,198 per month by delaying until 70.
2. You might get a larger lifetime benefit
Though you'll claim benefits for fewer years, delaying Social Security could result in a larger lifetime benefit for those who live long enough. The tipping point varies from person to person, but typically, if you live into your mid-80s or beyond, you'll get more from Social Security by delaying until 70 than you would by starting earlier.
If you're not sure whether that's the case for you, you can find out by opening a my Social Security account. Here, you'll find a tool that can estimate your Social Security benefit at any starting age based on your work history to date. Look up the monthly benefit amounts for each starting age you're considering and multiply them by 12 to get your estimated annual benefit. Then, multiply that by the number of years you expect to claim Social Security to figure out your lifetime benefit.
For example, if you claim a $1,500 benefit for 20 years, your annual benefit would be $18,000 and your lifetime benefit would be $360,000. Do this for a few different ages and compare them to see which offers you the most money overall.
Three cons of delaying Social Security until 70
While delaying Social Security can mean larger checks, it also has these drawbacks:
1. You'll have to cover your retirement costs on your own until 70
If you delay benefits, that means you'll have to pay the full cost of your retirement expenses on your own until then and that's not always easy. Unless you plan to work until 70 or you have a large nest egg, it might not be feasible.
If it's not possible for you, you may have to sign up earlier. You can still delay benefits for a little while -- perhaps until your FRA -- to help boost your checks. But when you need to sign up, you should do so rather than fall behind on your bills.
2. You risk not getting anything if you die early
People with short life expectancies shouldn't delay benefits until 70 because there's too great a risk that they could die without ever receiving a Social Security check. If you have a worrying personal or family health history, you're probably better off signing up right away at 62 and claiming as much as you can.
3. You might prevent your spouse from claiming benefits
Spouses can either claim benefits on their own work record, if they qualify, or on their spouse's work record. The Social Security Administration automatically gives you the larger of the two benefits, but you can't claim a spousal benefit until your partner signs up.
If one spouse plans to delay until 70, their partner can claim a benefit on their own work record sooner. But they won't be eligible for a spousal benefit until their spouse turns 70 and applies for their own benefits.
Because of this, it's a good idea for married couples to work out a Social Security claiming strategy together. Some might decide it makes sense for one partner to delay until 70, especially if they earned significantly more than the other person. But others might decide to claim sooner.
So should you delay Social Security?
Ultimately, it's your call whether you want to delay Social Security until 70. There are so many individual factors at play that there is no clear answer to this question. If you haven't already done so, weigh the pros and cons mentioned above and choose a tentative claiming age.
Then, once you have an idea of how much you'll get from Social Security, revisit your retirement plan and make sure you're saving enough to cover what Social Security won't.