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Why Don't More People Wait to Claim Social Security at 70?

By Chuck Saletta - Oct 3, 2017 at 6:45AM

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On the surface, it seems to make sense to wait and get the largest possible monthly benefit.

Claiming Social Security at age 70 provides you the highest monthly benefit amount you can receive based on your earnings history.  Especially if you're looking forward to a long and healthy retirement, waiting to claim Social Security at 70 can help you maximize your overall retirement income from the program.

Yet the most common age to claim Social Security is 62. That's the earliest possible age you can claim retirement benefits, and by claiming at that age, you're locking in the lowest monthly benefits you could receive. That raises a key question of why more people don't wait until age 70 to claim Social Security. Despite the obvious benefit of a higher monthly income from waiting, there are good reasons people claim earlier rather than deferring.

Senior man and woman, with picture of Social Security card superimposed with a dollar bill

Image source: Getty Images.

No. 1: They really need the money

Around 62% of retirees get at least half their income from Social Security. With the average retiree benefit at $1,369 per month  ($16,428 per year ), that indicates that most retirees would have a total income at or below that level if they didn't claim their benefits. If the ability is there to more than double an otherwise meager income just by signing up, it makes sense to take the money.

No. 2: They don't expect to live long enough to make waiting worthwhile

Not all retirees expect to live a long and healthy life in retirement. Despite the higher monthly check, for a retiree to collect more over your lifetime from waiting until age 70, that retiree will need to survive to somewhere around age 80 to 83. If health concerns, family history, or lifestyle choices make it unlikely for a retiree to survive long enough to get the benefit of that bigger payment, it simply makes no sense to wait.

No. 3: They want money while they're still young enough to enjoy it

Even for retirees who expect to live a long time, the unfortunate reality is that most of us tend to slow down the older we get. Many retirees would rather have the income boost from a Social Security check sooner, while they're still young and vibrant enough to enjoy the money. If you're largely homebound near the end of your retirement, the increased monthly income probably won't mean as much to you as the memories you could have made by getting your hands on the money earlier.

No. 4: They expect benefits through their spouse's work history

Your Social Security benefit depends on your own earnings history, but if you're married, you may be able to instead claim a benefit up to a level that's half your spouse's. Many couples have one spouse who accrued significantly higher Social Security benefits than the other, which makes it a potentially attractive benefit. Still, unlike a retiree's own benefits, spousal benefits stop increasing at a person's full retirement age instead of at age 70. As a result, it's not worthwhile to wait until 70 for those spousal benefits.

No. 5: They're really smart investors

Senior couple drinking white wine or champaign

Image source: Getty Images

Once you retire, you should shift some of your money to bonds to cover your near-term costs of living. How much you'll need to shift depends on how much of your spending you need to cover from your portfolio, as opposed to covering from other income sources such as Social Security.

The more costs you need your portfolio to cover, the higher the bond allocation you'll need. By taking Social Security earlier than age 70, you can keep more money in stocks longer, potentially benefiting from the faster compounding that stocks can deliver.

It's your retirement, your choice

Unless you have good reason to believe you'll have a shorter or longer life expectancy than the typical American, you'll probably receive about the same throughout your life no matter when you start collecting. As a result, feel free to weigh the trade-offs between collecting earlier and waiting until age 70, and make a decision that looks like it best fits your particular needs.

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