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The COVID-19 Stock Market Crash Makes a Good Case for Delaying Social Security

By Maurie Backman - Mar 30, 2020 at 6:04AM

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Here's a new reason to hold off on filing for benefits.

Seniors who are eligible for Social Security benefits can begin collecting them at age 62, and not shocking, that's the most popular age to sign up. But to snag your full monthly benefit based on your earnings history, you need to wait until full retirement age, or FRA, to sign up. FRA is either 66, 67, or 66 and a certain number of months, depending on the year you were born. There's also the option to delay benefits past FRA and score an 8% boost for each year that happens, up until age 70. But surprisingly, less than 4% of seniors take advantage of that opportunity.

The COVID-19 crisis might change that, though. Here's why.

What a higher monthly Social Security benefit can do for you

Right now, countless seniors are watching their retirement portfolios plummet in value as COVID-19 batters the U.S. economy and wreaks havoc on the stock market. But while younger folks may be well-positioned to wait out a downturn by leaving their savings alone, retirees who are already in the process of taking retirement plan withdrawals may not have that same option. As such, some stand to take serious losses if the need to access money from their 401(k)s or IRAs arises in the very near future.

Social Security card

IMAGE SOURCE: GETTY IMAGES.

That's where a higher Social Security benefit could come in handy. The more money you collect in benefits each month, the less reliant you'll be on your retirement savings to pay the bills. And when leaving more of your portfolio intact means avoiding major losses, that's huge.

Imagine you're entitled to a monthly benefit of $1,500, which is roughly what the average senior on Social Security collects today, at an FRA of 67. Waiting until 70 to claim your benefits will increase each monthly payment you get to $1,860. And having an extra $360 per month could spell the difference between tapping your retirement savings when your investments are down or having the option to trim expenses temporarily and cover most of your bills on your Social Security income alone.

Of course, not everybody has the option to delay benefits until age 70. Many seniors are forced out of their jobs earlier in life, and when that happens, claiming benefits prior to or at FRA often becomes necessary. Also, seniors in poor health are generally advised not to wait to file for Social Security, because while delaying benefits in that case does result in a higher monthly payment, it could also result in a lower lifetime payment.

But if holding off on taking benefits is something you can do, and is something that makes sense given your health and life expectancy, then it pays to consider boosting one of your most important retirement income streams for life. You never know when that higher monthly benefit could come in handy and prevent you from taking devastating financial losses that derail the rest of your senior years.

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