Americans have the ability to claim Social Security anytime between ages 62 and 70. However, the most popular age for claiming benefits is 62 -- as early as possible -- and the vast majority of seniors claim at full retirement age or earlier. In fact, just 3% of Americans wait until age 70 to start taking benefits.
Although it's certainly not the most popular option, if any or all of these three reasons apply to you, you may want to join the 3% and wait until 70 to claim your Social Security benefits.
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1. You want a higher monthly benefit for life
The most obvious reason for waiting to claim Social Security is for a higher monthly benefit check. If you wait to claim Social Security beyond your full retirement age, which is between age 66 and 67, depending on the year you were born, your retirement benefit will be permanently increased.
The increase can be quite substantial, especially if you wait until age 70 to claim. Your benefit is permanently increased at the rate of 8% per year (0.67% per month) until as late as age 70. What this means is that if your full retirement age is 66 and you wait as long as possible to claim your retirement benefit, your monthly check will be 32% higher than it would be if you claim at 66. A $1,500 monthly benefit would become $1,960. Even better, this increase doesn't include any cost-of-living adjustments that will be given during that four-year period, or the increase you could possibly get by working for another four years.
2. You're still working and have no plans to stop
One common Social Security myth is that you can't work and collect your Social Security benefit at the same time. This is 100% false, although it's true that your benefit can be reduced if you haven't yet reached full retirement age and your earnings exceed a certain threshold which is determined by the Social Security Administration every year, known as the "earnings test."
On the other hand, if you've already reached your full retirement age, you can collect your Social Security retirement benefit even if you're still working, regardless of how much money you make.
However, if you're still working and don't need the money from Social Security just yet, it can be a smart idea to wait. After all, Social Security is an inflation-protected income stream, and the larger your initial retirement benefit is, the bigger your annual cost-of-living adjustments will be.
3. You're in excellent health
Here's a secret: Social Security is designed so the average American gets the same overall amount of retirement benefits throughout their life, regardless of when they retire. So theoretically, it doesn't really matter when you decide to claim benefits, you should get the same amount of cash out of the system in the end.
However, it's important to remember that this is based on averages, not on your personal situation. In other words, if you're in excellent health and have a family history of longevity, you may have a better-than-average chance of living until 85, 90, or beyond.
Obviously, there's no way to predict with 100% accuracy how long you'll live. People in seemingly excellent health die all the time, and people who don't take great care of their health sometimes live well into their 90s.
Having said that, if you have reason to believe that you have a better than 50-50 chance of living longer than the average person, it can be a smart idea to wait as long as possible to claim Social Security.
The bottom line is that while most people don't wait until 70 to claim Social Security, there are a few situations where doing so can be in your best interest. There's no one-size-fits-all way to tell you the best time to claim Social Security, so it's important to consider all of the reasons for (and against) claiming at age 70 before deciding that it's the best move for you.
