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Should You Delay Social Security? Ask Yourself These 3 Questions to Find Out

By Maurie Backman - Jul 17, 2019 at 8:47AM

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Waiting on benefits could really pay off -- but in some cases, it's a move that could hurt you.

There's a good chance Social Security will be a substantial source of income for you in retirement -- especially if you're heading there without much personal savings. So it might pay to delay your benefits until age 70 and give them a boost.

Your benefits are calculated based on how much you earned during your top 35 working years. The age you file for benefits, however, could cause that number to go up, go down, or stay the same. If you file at full retirement age, you'll get the precise monthly benefit your earnings history allows for. That age depends on the year you were born, and it's somewhere in the range of 66 to 67.

Older man resting head on hands with thoughtful expression

Image source: Getty Images.

Meanwhile, you're allowed to file for benefits as early as 62, but for each month you claim Social Security ahead of full retirement age, your benefits will take a hit. On the flip side, you can delay benefits past full retirement age and increase them by 8% a year up until age 70, at which point there's no financial incentive to delay.

Holding off on filing for benefits might seem like a really great deal at first glance. But before you decide to delay Social Security, ask yourself these questions to ensure that it's right for you.

1. Am I still working?

If you still have a job by the time your full retirement age rolls around, and you're able to keep it, then holding off on benefits could make sense. After all, you won't take a financial hit by waiting; instead, you'll enjoy the perks of having a larger check from Social Security during retirement.

On the other hand, if you're no longer employed, and you need your Social Security income to keep up with your expenses, then it doesn't make sense to risk racking up debt in the course of growing your benefits. Chances are, the interest on your credit cards will well exceed the 8% annual boost you'll snag by waiting on Social Security.

2. How's my health?

It makes sense to delay Social Security if your health is strong, and you have reason to believe you'll live a long life. But if that's not the case, then it pays to claim benefits sooner to get a larger payout from Social Security in your lifetime.

Imagine you're entitled to $1,800 a month in benefits at a full retirement age of 67. Waiting until 70 to file will give you $2,232 a month instead. That's a large boost, but you'll need to live until 82 1/2 just to break even -- meaning, to collect the same lifetime total you'd get by filing at 67. If you pass away at any point before then, you'll lose out on money that could've otherwise been yours. So think about the state of your health in making your decision.

3. Will getting that money sooner enable me to fulfill my retirement goals?

You may not need your Social Security benefits to pay the bills or enjoy some modest leisure. But if you've dreamed of traveling the world, and your benefits enable you to do that, then it may not pay to hold off as long as possible. It stands to reason that you'll have more energy to travel, or do whatever it is you've always wanted to do, when you're in your early to mid-60s as opposed to your 70s. So if delaying benefits makes your goals harder to attain, then doing so doesn't necessarily make sense.

Delaying Social Security is a move that can pay off in a very big way -- but not for everyone. Before you go that route, make sure to answer these three questions. With any luck, they'll guide you toward the right decision.

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