How Delaying Social Security Beyond 2023 Could Earn You Much More Than an 8.7% Raise

Social Security's 2023 cost-of-living adjustment (COLA) was the largest in over 40 years, with checks jumping by 8.7%. This boosted the average benefit by $147 per month, and some people got even more.

But you shouldn't get too used to this. Increases like this only happen when inflation is high. Average Social Security COLAs are much lower.

Fortunately, waiting for the next COLA isn't the only way to get more money out of the program. 

Image source: Getty Images.

First, you need patience

To get the full Social Security benefit you've earned based on your work history, you need to wait until your full retirement age (FRA). This is somewhere between 66 and 67, depending on your birth year. You can claim as early as 62, but every month you receive benefits before your FRA shrinks your checks.

So delaying Social Security increases your monthly checks over time. The increase depends on your current age and your FRA, as outlined in the following table.

Data source: Social Security Administration.

Delaying Social Security by a single year could increase your benefit by anywhere from 5% to 8%, and if you put off applying for benefits for more than one year, you can raise your checks by a lot more.

If you qualify for $1,827 in Social Security (the average amount) at say age 62, you'd get $1,918 per month by signing up at 63. If you wait until your FRA of 67, you'd get $2,610 per month. And if you waited until you qualify for your maximum benefit at 70, you would get $3,236 per month. This doesn't include any increases from future COLAs. 

Although delaying Social Security can help your checks go a lot further when you finally apply for benefits, it's not the right decision for everyone. You have to be comfortable paying for all your retirement expenses without the program's monthly boost. And you need to be fairly confident that you'll live long enough to make delaying benefits worthwhile.

Those who live into their 80s or beyond often get larger lifetime benefits by delaying Social Security. But those who don't think they'll live past their 70s might prefer to sign up earlier so they can claim checks for as many years as possible. It's one more factor to consider in deciding when to claim.

If you've already applied for Social Security

The above advice is most useful to those who haven't applied for Social Security yet, but there are still ways to use it to your advantage if you're already collecting benefits. First, you can withdraw your Social Security application if it's been less than 12 months since you applied. The government will then treat you as if you've never claimed, and you'll accumulate delayed retirement credits to boost your payments when you reapply.

But there are a few catches. First, you can only withdraw your Social Security application once, so you have to choose your second claiming age carefully. You also have to be able to pay back all the benefits you and anyone else claiming on your work record has received thus far. Otherwise, you can't withdraw your Social Security application.

Your next-best option is to suspend benefits once you reach your FRA. When you do this, the government stops sending you checks until you either request that it starts again or you reach 70. During the time you're not receiving benefits, you'll earn delayed retirement credits for when you begin claiming again.

Having a backup plan to cover expenses is important to take advantage of any of the above strategies. If you don't think you can swing it and your only choice is taking smaller checks, you could look for other ways to increase your retirement income.