3 Reasons to Delay Social Security Until 70

Waiting as long as possible has its advantages.

Maurie Backman
Maurie Backman
Jun 22, 2019 at 8:22AM
Investment Planning

Most seniors can't wait to get their hands on their Social Security benefits, which explains why so many file at the earliest possible age of 62. But if you don't hold off on filing until full retirement age, you'll face a reduction in the monthly payments you collect. Full retirement age is either 66, 67, or somewhere in between, depending on your year of birth, and if you'd rather not face a lifelong cut in benefits, it pays to wait until at least that point to claim Social Security.

But there's another option to consider as well -- delaying your benefits past full retirement age. For each year you do, you'll accrue credits that boost your benefits by 8% up until age 70, at which point that incentive runs out.

Older man in apron smiling, leaning against counter with various vegetables on it

Image source: Getty Images.

Of course, the downside of delaying benefits until 70 is having to wait a long time to get your money. But here are three good reasons to hold out.

1. You don't have much (or any) savings

Though we're told we're supposed to save independently for retirement, many workers let their nest eggs fall by the wayside. The result? An alarming 22% of Americans have less than $5,000 saved for retirement, according to Northwestern Mutual. If you're nearing your golden years without much in the way of savings, and you don't have a ton of time to play catch-up, then it pays to delay Social Security as long as possible and raise your benefits as much as you can.

Imagine you're looking at retiring with $4,000 in your nest egg -- that sum could easily run out within a year. Even if you're approaching retirement with $100,000, that's still not a ton of money over the course of what could be a 30-year period. Delaying your benefits is therefore a good way to boost what could end up being your single largest source of monthly income.

2. Your health is great

If you wind up living a long life, delaying Social Security won't just boost your monthly income; it could also boost your lifetime income. Therefore, if your health is solid, you stand to come out ahead financially by waiting on benefits as long as possible.

Imagine you're entitled to $1,500 a month at a full retirement age of 67. Holding off until 70 will increase each monthly payment you collect to $1,860. Now if you live until age 82 1/2, you'll wind up with the same lifetime amount by filing at full retirement or by waiting -- $279,000. But once you live a month past 82 1/2, you're already getting a greater amount of lifetime income by delaying until 70, which is why it pays to wait when your health is great.

3. You need your job for more than just a paycheck

Many seniors file for Social Security and immediately quit their jobs, since their benefits, coupled with savings, are enough to replace their paycheck. If you decide to file at full retirement age and quit your job simultaneously, doing so may not hurt you financially. But leaving your job might leave you without a social outlet and result in a scenario where you're not getting any type of physical exercise, neither of which is healthy.

If your job is offering more than just financial benefits, it pays to hold off on filing for Social Security and stick with it longer. Of course, you can work and collect benefits simultaneously, but you may feel silly dragging yourself to work when you don't need the money from your earnings. But if you delay those benefits, you might effectively force yourself to keep plugging away, which is a good thing under the aforementioned circumstances.

Some people can't afford to delay Social Security -- namely, those who are forced into retirement sooner than expected and need the money. But if the above scenarios apply to you, it pays to wait as long as possible and grow that critical income stream.