They say good things come to those who wait.
And if you're able to wait before you claim Social Security, you can squeeze up to 24% extra out of the program. While you're eligible to claim Social Security as early as age 62, you won't get your full benefit until full retirement age, which is 67 for most people. But delaying beyond full retirement age, up to age 70, earns delayed retirement credits on Social Security retirement benefits.
Each year you delay beyond your full retirement age, your benefits check increases 8 percentage points. Delay three years, and you'll get 24% more.
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Banking bigger checks
Most retirees will get the most out of their Social Security retirement benefits by delaying until age 70.
There are a few exceptions. Those taking spousal benefits won't earn delayed retirement credits, so they will maximize their benefits at full retirement age. Additionally, those eligible for a survivor benefit should analyze their options for claiming early.
But if you plan to take your own benefit, you'll get bigger checks by delaying until 70.
If you've already claimed, you can still get a boost from delayed retirement credits if you're willing to suspend benefits. You're eligible to suspend your benefits starting at full retirement age, and you'll start accruing delayed retirement credits the month after you file to suspend. You can resume anytime, and you'll automatically resume benefits at age 70.
Can you really get 24% more?
While delaying retirement until 70 instead of 67 will result in checks that are 24% bigger, you'll have to forego checks for three extra years.
Indeed, Social Security is designed so that no matter when you decide to claim your retirement benefits, you're expected to receive roughly the same total amount over your lifespan. Someone claiming at age 62, for example, gets eight more years of checks than someone claiming at age 70. And while those checks might be smaller, someone will have to live just past 80 in order to break even on delaying.
In fact, you'll never be able to get 24% more in total lifetime benefits by delaying Social Security three years post full retirement age. Even if you live forever, you'll always have three extra years of checks if you hadn't delayed.
But delaying Social Security can give you time in early retirement to minimize the impact of Social Security on your taxes. And that can provide a significant boost to the amount of your total retirement savings and Social Security benefits you get to keep. So, if you can position your portfolio to help keep your taxes low once you start collecting Social Security, it can net you more than a 24% increase in your take home pay.
Should you wait until age 70?
Delaying until age 70 just to get bigger checks from Social Security isn't always the right move.
If you have health concerns that diminish your life expectancy, you may consider claiming earlier. If you have a pressing need for Social Security, you'll likely benefit from claiming early. (You can always suspend later if it's beneficial.)
But delaying until age 70 is a smart move for most retirees. It's like buying insurance against living longer than expected. If you live a long, happy, healthy retirement, you'll benefit the most by delaying until age 70 and getting that 24% boost to your monthly Social Security checks.
