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I Won't Wait Until Age 70 to Take Social Security -- Here's Why

By Sean Williams – Sep 20, 2019 at 6:06AM

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A maximized monthly payout doesn't always equate to an optimized lifetime benefit.

Social Security is unquestionably the most important social program in this country. Each month, 63.6 million beneficiaries receive a payout, with more than 22 million of these folks reliant on their guaranteed benefit to lift them out of poverty. I don't know any other social program capable of delivering such incredible results.

But given the fact that 62% of retired workers lean on their payouts to account for at least half of their monthly income, deciding when to take your payout is an incredibly important, and often difficult, decision. Since there's no one-size-fits-all guideline on when to take benefits, it tends to involve a bit of science and luck as to whether or not you've made a prudent claiming choice.

A person filling out a Social Security benefits application form.

Image source: Getty Images.

Waiting gives seniors their best opportunity to get the most out of Social Security

Statistically speaking, there are better ages than others to claim your Social Security retired worker benefit, at least according to surveys. The latest, from United Income entitled "The Retirement Solution Hiding in Plain Sight," found that the age retirees should have claimed Social Security to generate optimal income versus when they actually claimed was almost perfectly inverse. Put another way, 80% of the seniors United Income's study tracked had claimed benefits prior to reaching age 65. However, the optimal claiming age in greater than 80% of all cases ranging between ages 67 and 70.

As some of you may know, Social Security is a program that incentivizes patience. Although there are a number of factors that go into determining what you'll be paid each month, assuming you're eligible to receive a benefit, none holds a larger importance than your claiming age. For each year you hold off on taking your payout, beginning at age 62, your monthly payout will grow by approximately 8%, up until age 70. All things being equal -- i.e., work history, earnings history, and birth year -- a person claiming at age 70 could net up to 76% more per month than someone taking their payout as soon as possible (age 62).

The United Income analysis found that 57% of seniors would have made an optimal claiming decision by taking their benefit at age 70. Comparatively, only 4% of retired workers are waiting until age 70 to take their benefit today.

A messy pile of a half-dozen Social Security cards stacked atop each other.

Image source: Getty Images.

Here's why I'm not waiting until age 70 to take my own Social Security benefit

Despite this clear-as-day data, I'm not planning on waiting until age 70 to begin taking Social Security. Though I'm still 22 years and some change away from my initial eligibility for a retired worker benefit, I have three reasons why maximizing my monthly payout may not make much sense.

Firstly, I'm not counting on Social Security as a needed source of income during retirement. And should I need to lean on the program in any way, it would be as a very minor source of income. This is in stark contrast to current reliance data from Gallup, which finds that 57% of retirees count on Social Security as a major source of income, 33% rely on it as a minor source, and just 10% don't perceive their Social Security income as necessary to make ends meet. As long as I continue to save, invest, and trust in the historical outperformance of the stock market and high-quality companies, there's no reason I should have to rely on my Social Security income in any significant way.

Secondly, I'm not married and don't have kids, which means my claiming decision is going to affect me and only me. That's not the case for married couples. Couples not only have to strategize on how best to maximize household income during retirement, but the claiming age of your spouse could impact what you'd receive as a survivor benefit, assuming that survivor benefit is higher than what you'd receive from your own work and earnings history.

If a spouse claims prior to reaching their full retirement age, their surviving spouse has no chance of maximizing their survivor benefit. Obviously, getting married and/or having kids would throw this thesis out the window. But for the time being, my decision will only affect me.

A stethoscope lying atop a fanned pile of one hundred dollar bills.

Image source: Getty Images.

Thirdly, I'm not counting on longevity being on my side. Although we (thankfully) don't know when our expiration date will come, I admit to not being the greatest when it comes to eating healthy or going to the doctor with any regularity. I'm more the type of guy who, if he somehow made it to age 95, would attribute burgers or bacon as being the secret to my longevity. I would rather have a reduced or non-maximized monthly payout upfront that I could use for vacations, hobbies, or perhaps to pay minor recurring expenses, than wait around for eight years, not being sure if I'll live to see 70 or live much longer thereafter.

Clearly, this plan is still a work in progress. A lot can happen between age 39 and age 62. And I, like other future retirees, need to keep my claiming options open to adjust for possible changes in my health, marital status, and even finances. But for the time being, waiting until the statistically best age to take Social Security likely isn't in the cards for me.

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