Want to Delay Starting Social Security Until Age 70? Here's How (and Why) to Do It

Figuring out when you will start collecting Social Security is one of the most important retirement decisions you'll make because the timing affects the size of the checks. Delaying can make your benefits much more robust, but that's easier said than done -- and it's not always your best move.

Here's a look at why you might or might not want to delay starting to collect your benefits and (if you want to) how to do so.

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What's your full retirement age?

Most Social Security deliberations will relate to your full retirement age (FRA), so be sure you know what yours is. It's the age at which you can collect the full benefits to which you're entitled, based on your earning history and contributions to the Social Security system. For most of us, it's either age 66 or age 67. The system allows us to start collecting our benefits as early as age 62 and as late as age 70; collecting earlier or later than our full retirement age will make our benefit checks smaller or bigger, respectively. The table below shows what percentage of your full benefits you'll get, approximately, depending on your FRA:

Source: Social Security Administration.   

Your decision -- to collect early, late, or on time

There are good reasons to start receiving your benefits on time or early. For example, if your family is generally not blessed with long lives, or you're in poor health, then you might want to start collecting early on the assumption that you may not live long enough to make waiting financially worthwhile. It's worth remembering, too, that smaller checks are not quite as undesirable as they may seem because you'll get many more checks by starting at age 62 than if you start at age 70. In fact, the system is designed so that, for those who live average-length lives, the total payout will be about the same no matter when you start.

If you think you have a good chance of living a longer-than-average life, though, or if you want to maximize your benefits for another reason, perhaps so that your spouse will be able to collect them if you pass away first, then aiming for age 70 is smart.

How to make it to age 70 before collecting

If you want to delay starting to collect your Social Security benefits until age 70, there are several key ways to make that possible. The most obvious one -- and the financially safest, as well -- is to just keep working until age 70. But you may not enjoy your job that much and may be planning to retire earlier, or even much earlier than that. Also, many people don't end up getting to choose when they retire. It's quite often the case that they're laid off or are forced to retire due to a health setback.

So here's another strategy: If you have a retirement savings account or accounts, you might tap them more heavily in the first years of your retirement so you can delay tapping into Social Security. Withdrawals from traditional IRAs and 401(k)s are treated as taxable income, so sums you withdraw in your first years of retirement when you don't yet have Social Security income to factor in will likely get taxed less, as you'll be in a lower tax bracket.

Remember, though, that if any financial accounts that you plan to tap for income on which to live in retirement are heavily invested in the stock market, they're vulnerable to its volatility. You might want to park some of those funds in safer investments, such as money market accounts, CDs, or short-term bonds. That's true even if you're planning to take Social Security early. As a general rule, avoid having any money you think you will need in five (if not 10) years invested in stocks.

A good way to figure out how much you might take out of your savings and investments each year in retirement is to use the table used for required minimum distributions (RMDs) for retirement accounts such as traditional IRAs and 401(k)s. It features "distribution factors" that work like this: If you're 70 and the factor for that age is 27.4, divide the total of the account you're taking the withdrawal from by 27.4. So if you're tapping a $500,000 portfolio and you divide that by 27.4, you would end up with a withdrawal of $18,248 for the year. The table typically starts only at age 70, but you can estimate withdrawals for earlier years by using larger factors.

Many studies have been done on retirement income strategies, and you might run across other useful guidance by doing a little research. The ideas above can help you put together a sound plan for yourself. You might augment them with a visit to a financial planner, who can help you know if your overall plan is a good one or help you come up with a good plan in case you need one.